Republic of the Philippines TAKE HOME 3
MATHEMATICS
University of Eastern Philippines
ECONOMY
College of Engineering SET - A
CIVIL ENGINEERING DEPARTMENT Prepared by:
University Town, Northern Samar Engr. JONATHAN C. BULAGAO
PROBLEM 1 PROBLEM 9
What is the book value of P120,000 worth electronic Find the nominal rate which if converted quarterly could be
equipment after 8 years of use if it is depreciates to 13% of used instead of 12% compounded monthly.
its original value in 12 years. Use straight line method of a. 10.36% c. 9.58%
depreciation. b. 12.12% d. 8.25%
a. P50,400.00 c. P35,650.85 PROBLEM 10
b. P52,412.50 d. P60,500.50 Calculate the effective interest rate per month for an interest
PROBLEM 2 rate of 14% in continuously compounded account?
A father of a boy deposited to a trust company a sufficient a. 1.488% c. 1.258%
amount of money on the day his son was born so that the b. 1.671% d. 1.173%
boy could receive five annual payments of P10,000 each for PROBLEM 11
his college tuition fees starting his 18th b-day. How much Annual deposits were made in a fund earning 10% per
did the father deposit? I = 12% annum. The first deposit was P2000 and each deposit
a. P10,500 c. P5,250 thereafter was P200 less than the preceding one. Determine
b. P50,000 d. P13,550 the amount in the fund after the sixth deposit.
PROBLEM 3 a. P13000 c. P12000
The cost of machine is P140,000 and has a useful value of b. P11000 d. P10000
P10,000, find the depreciation charge during 4th year using PROBLEM 12
double declining balance method. Calculate the difference of the future amount of annuity due
a. P16,765.60 c. P19,765.60 and ordinary annuity. Given that the periodic payment is
b. P10,762.60 d. P14,765.60 P12,500 with interest rate of 12% compounded annually for
PROBLEM 4 20 years.
A man borrows P10,000 from a loan firm. The rate of a. P66,462.93 c. P108,078.66
simple interest is 15%, but the interest is to be deducted b. P13,931.53 d. P273,248.18
from the load at the time the money is borrowed. At the end SITUATION 2
of one year he has to pay back P10,000. What is the actual The cost of the machine is P140,000 and has a useful life of
rate of interest? 8 years. If the salvage value is P10,000;
a. P14.88% c. 12.58% 13. Determine the depreciation during the 4th year using
b. 17.65% d. 11.74% double-declining balance method.
SITUATION 1 a. P14,765.63 c. P16,250.00
An advertisement of an investment firm states that if you b. P14,622.66 d. P18,055.56
invest P500 in their firm today you will get P1,000 at the 14. Determine the depreciation during the 4th year using
end of 4 ½ years. sum of the year’s digit method.
5. What nominal rate is implied if interest is compounded a. P14,765.63 c. P16,250.00
monthly? b. P14,622.66 d. P18,055.56
a. 19.58% c. 15.50%
PROBLEM 15
b. 13.15% d. 12.55%
A lathe for a machine shop costs P60,000 if paid in cash.
6. Determine the effective interest. On the installment plan, a purchaser should pay P20,000
a. 19.58% c. 10.46% down payment and 10 quarterly installments, the first due
b. 16.65% d. 10.54% at the end of the first year after purchase. If money is worth
PROBLEM 7 15% compounded quarterly, determine the quarterly
What is the present worth of a 10 year annuity paying installment.
P10,000 at the end of each year, with interest at 15% a. P5,439.18 c. P4,319.20
compounded annually? b. P3,518.35 d. P5,615.40
a. P46,300 c. P50,188 SITUATION 3
b. P40,078 d. P51,448 The cost producing a commodity consist of P102.00 per
PROBLEM 8 unit for labor and material cost and P54.00 per unit for other
Determine the ordinary simple interest on P10,000 for 10 variable cost. The fixed cost per month amounts to
months and 9 days if the rate of interest is 12%. P850,000. The commodity is sold at P740.00 each.
a. P2,050 c. P1,030 16. What is the break-even quantity per month?
b. P980 d. P2,000 a. 1465 c. 1546
1
Republic of the Philippines TAKE HOME 3
MATHEMATICS
University of Eastern Philippines
ECONOMY
College of Engineering SET - A
CIVIL ENGINEERING DEPARTMENT Prepared by:
University Town, Northern Samar Engr. JONATHAN C. BULAGAO
b. 1645 d. 1456 23. Determine the length of service life necessary if the
17. How many units must be produced each month in order depreciation method used is the straight-line method.
that the net profit equals the cost? a. 7 c. 10
a. 3874 c. 3547 b. 19 d. 8
b. 3972 d. 2912 24. Determine the length of service life necessary if the
18. What is the net profit for a production of 4000 units per depreciation method used is the sinking fund method at 8%.
month, in pesos? a. 7 c. 8
a. 1,486,000 c. 1,254,000 b. 19 d. 10
b. 1,563,000 d. 1,832,000 25. Determine the length of service life necessary if the
PROBLEM 19 depreciation method used is the SYD method.
Maine borrowed P2,400 at 1% per month payable in 24 a. 7 c. 8
equal end-of-the-month payments. How much of the loan b. 19 d. 10
remains unpaid immediately after he has paid 12th payment? PROBLEM 26
a. P1,219.27 c. P1,727.21 What rate of interest compounded monthly is equivalent to
b. P1,271.51 d. P1,212.79 an interest rate of 14% compounded quarterly?
PROBLEM 20 a. 13.84% c. 11.82%
An engineering firm purchased 12 years ago heavy planner b. 16.27% d. 15.28%
for P50,000. As the life if the planner was 20 years, a PROBLEM 27
straight-line depreciation reserve has been to provide on The production capacity of a certain factory is 9000 units
that basis. Now the firm wishes to replace the old planer and only operating at 80% capacity. The fix operating cost
with newly designed planer possessing several advantages. is P800,000. If capital per unit is P200 and selling price per
It can sell the old planer with newly-designed planer unit is P500, what is the current profit of the factory if all
possessing several advantages. It can sell the old planer for units are sold?
P10,000. The new machine will cost P70,000. How much a. P2,450,000 c. P1,000,000
new capital will be required to make the purchase? b. P2,360,120 d. P1,360,000
a. P60,000 c. P30,000 PROBLEM 28
b. P50,000 d. P40,000 What is the smallest nominal rate to yield an effective rate
PROBLEM 21 of 10.15%
The JCB Construction agreed to pay P100,000 for a new a. 7.669% c. 9.667%
bulldozer with an expected life of 20 years. After delivery, b. 6.679% d. 6.967%
it was found that the bulldozer has only 85% of the PROBLEM 29
guaranteed horsepower. If a more efficient machine would A machine is to be purchased for P155,000 it has an
increase the earnings of the company by an estimated estimated life of 8 years and a salvage value of P6000. A
P12,000 annually, what would the company be willing to sinking fund is to be established so money will be available
pay for more efficient machine? Interest is 12% to purchase a replacement when the first machine wears out
compounded annually. at the end of 8 years. An amount of P13,030 is to be
a. P189,633.32 c. P178,688.78 deposited at the end of each year during the lifetime of the
b. P182,842.68 d. P168,127.42 first machine into this sinking fund. What interest rate that
PROBLEM 22 this fund must earn to produce sufficient fund to purchase
A machine costing P60,000 is estimated to have a book the replacement machine at the end of 8 years?
value of P4,000 when retired at the end of 8 years. a. 8% c. 12%
Depreciation cost is computed using a constant percentage b. 10% d. 14%
of the declining book value. What is the annual rate of PROBLEM 30
depreciation in %? An electric replacement pump is being considered for
a. 32.25% c. 28.72% purchase. It is capable of providing 200 hp. The pertinent
b. 42.50% d. 18.50% data are as follows: Cost = P3,200; Maintenance cost per
SITUATION 4 year = P50; Electric efficiency = 0.85; life expectancy = 14
A certain company make it the policy that for any new piece years. The pump is used for 400 hours per year and the cost
of equipment the annual depreciation cost should not of electricity is P0.04 per kilowatt-hour (1 horsepower =
exceed 10% of the original cost at any time with no salvage 0.746 KW). Assuming the pump will have no salvage value,
or scrap value. what will be the monthly cost?
a. P258.20 c. P238.20
2
Republic of the Philippines TAKE HOME 3
MATHEMATICS
University of Eastern Philippines
ECONOMY
College of Engineering SET - A
CIVIL ENGINEERING DEPARTMENT Prepared by:
University Town, Northern Samar Engr. JONATHAN C. BULAGAO
b. P248.20 d. P228.20 Interest rate = 12% compounded annually
PROBLEM 31 a. P1,296,943.96 c. P1,038,139.48
A machine was purchased at an original cost of P400,000 b. P1,372,491.49 d. P1,038,493.27
with a salvage value of P20,000. Life of this machine is PROBLEM 36
expected to last for 6 years. It was used for 4000 hrs in the A small entrepreneur invested a capital of P80,000 for a buy
first year, 6000 hrs in the second year and 8000 hrs on the and sell business. He estimated to have a gross income of
3rd year. The machine is expected to last for38000 hrs in a P25,000 annually and an operating cost of P6000 annually.
period of 6 years. Which of the following gives the It is assumed the business to have a life of 10 years. If the
depreciation at the end of the second year? rate of interest is 12%, compute the benefit cost ratio.
a. P50,000 c. P70,000 a. 1.24 c. 1.44
b. P60,000 d. P80,000 b. 1.34 d. 1.54
PROBLEM 32 PROBLEM 37
A coin machine costing P200,000 has a salvage value of An equipment costs P325,000 and has a life of 4 years, with
P20,000 at the end of its economic life of 5 years. The salvage value of 50,000. Determine the capitalized cost of
schedule of production per year is as follows: using the machine if the rate of interest is 16% per annum.
Year Number of Coins a. P661,241 c. P663,239
1 100,000 b. P662,240 d. P664,238
2 80,000 PROBLEM 38
3 60,000 A proposed manufacturing plant will require a fixed capital
4 40,000 investment of P8 M and an estimated working capital of
5 20,000 P1.5 M. The annual profit is P2 M and the annual
Determine the annual reserve for depreciation for the 3rd depreciation is to be 8% of the fixed capital investment.
year only. Compute the payout period.
a. P30,000 c. P28,000 a. 1.99 years c. 2.83 years
b. P44,000 d. P36,000 b. 2.36 years d. 3.03 years
PROBLEM 33 PROBLEM 39
A machine costs P900,000 and will have a salvage value of An investment of P8.5 M is expected to yield an annual
P450,000 when retired at the end of 5 years. Using Sum of income of P2.8 M. Determine the recovery period in years
Years Digit Method, what is the sum of the depreciation based on the following estimates.
cost in the first two years? Annual depreciation = P1.0 M
a. P230,000 c. P270,000 Operational expenses = P0.6 M
b. P250,000 d. P290,000 Taxes and insurance = P0.2 M
PROBLEM 34 Miscellaneous expenses = P50,000
A telephone company purchases a microwave radio a. 5.9 years c. 7.9 years
equipment for P6 M. If the equipment shall be depreciated b. 6.9 years d. 8.9 years
over a period of 8 years with a salvage value of 5% of the PROBLEM 40
cost of equipment, determine the worth of the equipment on A firm has the capacity to produce 1,000,000 units of
the 4th year after deducting the depreciation charges using product per year. At present, it is able to produce and sell
MARCS Method. 600,000 units yearly at a total income of P720,000. Annual
a. P2.129 M c. P2.215 M fixed costs are P250,000 and the variable costs per unit is
b. P2.388 M d. P2.293 M P0.70. Determine the number of units that should be sold
PROBLEM 35 annually to break-even.
What is the difference between the sums of an annuity due a. 400,000 c. 60,000
and an ordinary annuity for the following data: b. 500,000 d. 70,000
Periodic payment = P150,000
Terms = 20 years
Payment intervals = 1 year
