MIDTERM EXAMINATION – MATHEMATICS OF INVESTMENT

NAME: ________________________________________ SECTION: ___________________

Instruction: Provide the information needed in each situation. Write your answer on the space before the
number. Answers should be written in black or blue ink only. Please provide solutions if necessary.

1. Find the maturity value of the note with the following details: face value of the note, P200,000; date of
the note, June 14, 2018; term, 2 months; interest rate, 14%.

2. Using the preceding information, the payee cashed the note on July 17 at a bank at a 12% bank
discount rate. Find the bank discount and the proceeds.

3. What rate of interest did the bank in the previous problem realize on its investment if it held the note
until the maturity date?

4. How many years will it take P50,000 invested at 8% simple interest to double to P100,000? How long
will it take if the interest is increased to 10%?

5. Andrea Anemone borrowed money to buy a car at 13.5% simple interest from her credit union. If the
loan was repaid in 2 years and the amount of interest was P27,000, how much did Andrea borrowed?

6. Accumulate P300,000 for eight years at 7% compounded quarterly. How much is the interest?

7. Agatha Alana invested P30,000 at the Prime Bank, at 6% interest compounded quarterly. What is the
effective rate of this investment?

8. Find the compound amount at the end of seven years if P400,000 is invested at 6% compounded
monthly for the first two years and at 6 1/2% compounded annually for the last five years.

9. On January 1, 2018, Abigail Adar borrowed P12,000 and agreed to repay it with P4,650.70 interest. If
the interest is at 6% compounded quarterly, what amount must she repay

10. Using the preceding problem, what date will she repay?

11. Anne is planning a vacation in Europe in 4 years, after graduation. She estimates that she will need
P350,000 for the trip. If her bank is offering 4-year certificates of deposit with 8% interest compounded
quarterly, how much must Anne invest now in order to have the money for the trip?

12. Using the preceding problem, how much compound interest will be earned on the investment?

13. Find the present value of P85,000, if the interest is 6% compounded quarterly, for 10 years.

14. Angelo wants to renovate his house in 3 years. He estimates the cost to be P300,000. How much must
Angelo invest now at 8% interest compounded quarterly, in order to have P300,000, 3 years from now.
15. Arney Arval estimates he will need P250,000 to set up a law office in 7 years, when he graduates from
law school. How much must Arney invest now at 12% interest compounded quarterly in order to
achieve his goal?

16. Bob Savings & Loan is paying 6% compounded monthly. How much will P1,000 deposited at the end of
each month be worth after two years?

17. You purchased printing machine and must pay P100,000 to your creditor at the end of each quarter for
one year. How much should be deposited now at 8% interest compounded quarterly in order to meet
this obligation?

18. A debt of P25,000 was repaid in ten equal quarterly payments. If the rate of interest was 7%
compounded quarterly, what was the size of each payment?

19. How much interest is earned in 10 years if P1,000 is deposited at the end of each month in an account
that pays 15% compounded monthly?

20. An office table sells for P6,000. As an incentive, a furniture store offers to accept P500 per month for
one year with no finance charge. If the actual rate of interest charged by the bank is 12% compounded
monthly, what is the actual cost of the office table?