Problems:

1. The Philippine Society of Engineers is planning to construct its own building. Two proposals are being considered: a. The construction of the building now to cost 400,000.00. b. The construction of a smaller building now, to cost 300,000.00 and at the end of 5 years, an extension to be added to cost 200,000.00 Which proposal is more economical if interest is 20%, and by how much? 11. A businessman wishes to earn 7% on his capital after payment of taxes. If the income from an available investment will be taxed at an average rate of 42%, what minimum rate of return, before payment of taxes, must the investment offer to be justified?

2. If you borrow money from your snake friend with a simple interest of 12%. If you wish to pay her, find the present worth of 20,000, which is due at the end of nine months.

3. Five years ago Mark purchased a house for his girlfriend for 34,000.00. Luckily, they got separated a while ago, if it is sold today for 50,000.00, what is the rate of appreciation of its value?

4. What will be the future worth of money after 14 months if a sum of 10,000 is invested today at a simple interest rate of 12% per year?

5. A sum of 1,000 is invested now and left for eight years, at which time the principal is withdrawn. The interest has accrued is left for another eight years. If the effective annual interest rate is 5%, what will be the withdrawal amount at the end of 16th year?