Question

Question 19

Suppose P5,000 is invested at the end of each six months for three years and that 19% interest is paid compounded semi-annually. How much will be in the account after three years?

A. P7,850.00

B. P10,700.00

C.P45,623.19

D. P38,094.29

Question 20

Find the present value of an ordinary annuity if its value at the end of three years is P50,000. Assume money is worth 8% compounded quarterly.

A. P38,000.00

B. P60,575.34

C. P39,424.66

D. P35,352.42

Question 21

If money is worth 9% compounded quarterly, how much must a man save every three months to accumulate P100,000 in two years?

A. P11,548.46

B. P12,633.33

C. P28,000.00

D. P26,245.59

Answer 1

Question 19:

Answer: D. P 38,094.30

n = 3 x 2 = 6

i = 19 % x 1/2 = 9.5 %

FVA _{9.5%, n=6} = [ { ( 1.095) ⁶ - 1 } / 0.095 ] = 7.61886

Future value of annuity of P5,000 = 5,000 x 7.61886 = P 38,094.30

Question 20:

Answer: C. P 39,424.66

n = 3 x 4 = 12

i = 8 % x 1/4 = 2 %

Present value of P 50,000 = P 50,000 / ( 1.02) ¹² = P 39,424.66

Question 21:

Answer: A. P 11,548.46

n = 2 x4 = 8

i = 9 % x 1/4 = 2.25 %

FVA _{2.25 %, n=8} = [ { ( 1.0225) ⁸ - 1 } / 0.0225 ] = 8.65916

Amount to be saved every three months to reach P 100,000 in 2 years = P 100,000 / 8.65916 = P 11,548.46