Question

1. Determine the exact simple interest for a PhP 20,000 loan made in September 23, 2020 to be paid off on December 25, 2023 at interest rate of 7% per year.
2. Claire and Phil decided to open a savings account for Luke's college education. They initially deposited PhP 20,000 which earns at interest rate of 8% compounded quarterly. How much can be withdrawn 6 years from now if Luke chooses to split the amount equally into 4 consecutive yearly withdrawals?
3. Ellen invested PhP 2,000,000 in a project which will produce an annual revenue of PhP 500,000 over the next 20 years. Annual overheads (i.e., taxes and insurance) are estimated to be 2% of the first cost. What percentage of annual revenue should the other operating cost be capped to be able to recover the investment in 10 years? Assume no salvage value.
4. Anna purchased a new oven for PhP 50,000 which according to the confident salesman, could produce 100,000 cupcakes over its useful life of 2 years, and could be resell at 10% of its original value. Anna was able to bake 23,000 cupcakes in the first year, and 26,000 cupcakes in the second year. What is the accumulated depreciation cost after two years?

5. Eggsy bought a new machine from Kingsman Corp. which cost him PhP 5,000,000. Freight and installation charges included would cost him another 7% of the original price. What resale value would give him the same book value after 3 years if he would depreciate the equipment using DBM and DDBM, respectively? Assume useful life of 15 years.

6.Cobb and Ariadne loaned from Totem Bank PhP 28,000 which is to be repaid by equal payments every quarter for the next 5 years. Given interest rate of 7% compounded continuously, how much will be the amount of each payment?

7. A company estimates that insulation of steam pipes in the factory will reduce the fuel bill by as much as 25%. The cost of the insulation is P100,000 installed and the annual cost of taxes and insurance is 6% of the first cost. Without the insulation, the annual fuel bill is P200,000. If the insulation is worthless after 5 years of use, and a minimum return on investment of 10% is desired, would it be worthwhile to invest in the insulation? Solve using the ROR method and assume incurred fuel bill as sunk cost.

8. A proposed manufacturing plant will require a fixed capital investment of P6M and an estimated working capital of P1M. Annual depreciation is estimated to be 5% of the fixed capital investment. If the annual profit is P3M, determine the minimum payback period.

9.

Philex Oil Refinery developed an oil well which is estimated to contain 7M barrels of oil at an initial cost of $75M. What is the depletion charge during the year where it produces 1M barrels of oil? Use the Unit or Factor Method in computing depletion.

10. Anna purchased a new oven for PhP 50,000 which according to the confident salesman, could produce 100,000 cupcakes over its useful life of 2 years, and could be resell at 10% of its original value. Anna was able to bake 23,000 cupcakes in the first year, and 26,000 cupcakes in the second year. Which of the following statements holds true under this premise?

Answer 1

The solution to the first question is provided in the following attached image file :

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