COMPREHENSIVE EXAM IN ENGINEERING ECONOMICS
PART 1
SIMPLE INTEREST
Problem No.1: Determine the exact simple interest on P50 000 periods for the period June
25, 2005 to September 2, 2006, if the rate of interest is 12% per year?
Problem No. 2: A loan of P2000 is made for a period of 13 months, from January 1 to
January 31 the following year, at simple interest rate of 20% . What future amount is due
as the end of the loan period?
Problem No. 3: If you borrow money from your friend with simple interest of 12%, find
the present worth of P20, 000, which is due at the end of nine months.
INTEREST
Problem No. 4. A loan of P10,000 for 3 years at 10% simple interest per year. Determine
the interest earned and the accumulated amount.
Problem No. 5 Annie buys a television set from a merchant who asksvP12,500. At the end
of 60 days (cash in 60 days). Annie wishes to pay immediately and the merchant offers to compute
the cash price in the assumption that money is worth 8% simple interest. What is the cash price
today?
Problem No.6: What will be the future worth of money after 14 months of a sum of P10,
000 is invested today at a simple interest rate of 12% per year?
Problem No. 7: What is the amount of interest earned on $2,000 for five years at 10% simple
interest per year?
Problem No. 8: Determine the effective rates of interest for the following nominal rates of interest
a. 9% compounded annually
b. 9% compounded semi annually
c. 9% compounded quarterly
d. 9% compounded monthly
e. 9% compounded daily
Problem No.9: If you are investing which is better 15% compounded semiannually or 14.5
compounded monthly?
Problem No. 10: What nominal rate of interest compounded quarterly can be used instead of 8%
compounded monthly. (r =8% compounded monthly but the required interest rate, i, is per
quarter.)
Problem No. 11: Supposed that you have just borrowed P75,000 at 12% nominal interest
compounded quarterly. What is the total lump-sum, compounded amount to be paid by
you at the end of a 10 – year loan period?
Problem No. 12: A sum of P1,000 is invested now and left for 8 years at which time the
principal is withdrawn. The interest has accrued is left for another 8 years. If the effective annual
interest rate is 5%, what is the amount of the account at the end of the 16th year?
Problem No. 13: A businessman wants to have P500,000 4 years from now. What amount
should he invest now if it will earn interest of 6% compounded quarterly for the first two
years and 8% compounded semi – annually during the next two years?
RATE OF DISCOUNT
Problem No. 14: Mr. de la Cruz borrowed money from a bank. He received from the bank
P1, 342 and promised to repay P1, 500 at the end of 9 months. Determine the corresponding
discount rate.
Problem No. 15: John is deciding between a loan charged at 5% bank discount, and one
charged at 6% simple interest. Either would require John to repay P1000 on August 3, 2010. It is
now August 3, 2010, which loan should John get?
Problem No. 16: How much should the engineer borrow from a bank that charges 10%
simple discount for 6 months if he received an amount of P14, 500?
Problem No. 17: A man applied for a loan with 16% interest. The interest will be
automatically deducted from the loan at the time the money is released, and after one year
will have to pay the same amount as stated in the loan. Determine the interest actually
charge to him.
Problem No. 18: How much interest is deducted in advance from a loan of P18,000.00 for
one year and 6 months if the discount rate is 9%. How much is the proceeds after deducting
the interest?
Problem No. 19: Mr. de la Cruz borrowed money from a bank. He received from the bank
P1, 342 and promised to repay P1, 500 at the end of 9 months. Determine the corresponding
discount rate.
Problem No. 20: John is deciding between a loan charged at 5% bank discount, and one
charged at 6% simple interest. Either would require John to repay P1000 on August 3,
2010. It is now August 3, 2010, which loan should John get?
