A construction firm is considering purchasing equipment that will reduce cost by P40,000. The
equipment costs P300,000 and has a salvage value of P50,000 and a life of 7 years. The annual
maintenance cost is P6,000. While not used by the firm, the equipment can be rented to others to
generate an income of P10,000 per year. If the money can be invested for 8% return, is the firm justified
in buying the equipment? (USE ROR Method)
A.
No
B.
Yes
C.
None of the choices
D.
I do not care
ANSWER: A
P270,000 invested in a project that will produce uniform annual revenue pf P185,400 for 5 years and
have a salvage value of 10% of the investment. Maintenance will be P81,000 per year, taxes and
insurance 4% of the investment. The company expects capital to earn not less than 25% before income
taxes. Is this a desirable investment? (Use Present Worth Method)
A.
Yes
B.
No
C.
Maybe
D.
I do not care
ANSWER: B
Barney need to choose between two equipment for his project. Equipment A: First cost = 200,000.00,
Annual Operating Cost = 32,000.00 , Annual Labor Cost = 50,000.00 , Property taxes = 3%, Payroll taxes =
4%, Estimated life = 10 years. Equipment B: First cost = 300,000.00, Annual Operating Cost = 24,000.00 ,
Annual Labor Cost = 32,000.00 , Property taxes = 3%, Payroll taxes = 4%, Estimated life = 10 years. If the
minimum required rate of return is 15%, which equipment should be selected? (USE ROR method)
A.
Equipment A
B.
Equipment B
C.
Both
D.
I do not know
ANSWER: B
Barney need to choose between two equipment for his project. Equipment A: First cost = 200,000.00,
Annual Operating Cost = 32,000.00 , Annual Labor Cost = 50,000.00 , Property taxes = 3%, Payroll taxes =
4%, Estimated life = 10 years. Equipment B: First cost = 300,000.00, Annual Operating Cost = 24,000.00 ,
Annual Labor Cost = 32,000.00 , Property taxes = 3%, Payroll taxes = 4%, Estimated life = 10 years. If the
minimum required rate of return is 15%, what is the total annual cost of equipment A? (USE Annual cost
method)
A.
P126,056
B.
P130,987
C.
P129,850
D.
P135,550
ANSWER: C
Barney need to choose between two equipment for his project. Equipment A: First cost = 200,000.00,
Annual Operating Cost = 32,000.00 , Annual Labor Cost = 50,000.00 , Property taxes = 3%, Payroll taxes =
4%, Estimated life = 10 years. Equipment B: First cost = 300,000.00, Annual Operating Cost = 24,000.00 ,
Annual Labor Cost = 32,000.00 , Property taxes = 3%, Payroll taxes = 4%, Estimated life = 10 years. If the
minimum required rate of return is 15%, what is the equivalent uniform annual cost of Equipment B?
A.
P129,850
B.
P124,030
C.
P130,870
D.
P126,070
ANSWER: D
Cellphone cost P12,000 new. It is estimated to have a life of 5 years with a salvage value at the end of life
of P1,000. Determine the book value at 3rd year.
A.
P8,333
B.
P5,400
C.
P3,200
D.
P1,733
ANSWER: C
Cellphone cost P12,000 new. It is estimated to have a life of 5 years with a salvage value at the end of life
of P1,000. Determine the book value at 4th year.
A.
P8,333
B.
P5,400
C.
P3,200
D.
P1,733
ANSWER: B
Mixer cost of P220,000 and used for 10 years, the life span of the equipment. The scrap value is
P20,000.00. what is the book value after 5 years, using double declining method.
A.
120,000
B.
69,750
C.
72,090
D.
80,980
ANSWER: C
A computer set cost of P56,000. Other expenses including installation of anti-virus amounted to
P4,000.00. The set predicted to have a life of 16 years with a salvage value of 10% of the original cost.
Determine the book value at the end of 12 years by sinking fund method at 12% interest.
A.
26,098
B.
29,520
C.
31,092
D.
34,890
ANSWER: B
A computer set cost of P56,000. Other expenses including installation of anti-virus amounted to
P4,000.00. The set predicted to have a life of 16 years with a salvage value of 10% of the original cost.
Determine the book value at the end of 12 years by SLM.
A.
19,500
B.
12,879
C.
21,907
D.
22,850
ANSWER: A
SMC purchased an equipment for P53,000 and paid P1,500 for freight and delivery charges to the job
site. The equipment has a normal life of 10 years with a trade-in value of P5,000 against the purchase of
a new equipment at the end of the life. Determine the annual depreciation cost by the straight line
method.
A.
P3,668
B.
P4,387
C.
P3,987
D.
P4,950
ANSWER: D
Peller machine losses 10% of its value each year. The machine costs P 2,000 originally. Find the book
value at the end of 5 years.
A.
P1,620.00
B.
P1,312.20
C.
P1,458.00
D.
P1,1180.98
ANSWER: D
A man makes a series of ten annual deposits starting at 2000 at the end of first year and increasing the
amount deposited by 10% every year thereafter. Find the total amount at the end of ten years if the rate
of interest on all sum’s of deposit is 8 %
A.
34,384.56
B.
28,784.77
C.
43,481.74
D.
47,845.26
ANSWER: A
Laptop costs ₱20,000 today and has an estimated scrap cash value of ₱2,000 after eight years. Inflation
is 8%. How much money needs to be set aside each year to replace the Laptop with an identical model
eight years from now?
A.
3292.27
B.
7430.76
C.
2435.97
D.
3479.86
ANSWER: A
Determine the present worth of an annuity consisting of 6 payments of P 120,000 each, the payment are
made at the beginning of each year. Money is worth 15% compounded annually.
A.
P 52,226.40
B.
P 120,801.60
C.
P 35,876.98
D.
P 134,879.78
ANSWER: A
Money is 15% for the following scholarship: 30,000 at the end of each year for 6 years, 40,000 for the
next 6 years and 50,000 thereafter. What amount of money invested?
A.
250,356
B.
241,277
C.
260,876
D.
231,980
ANSWER: B
I-Phone 12 costing 60,000 payable in 12 quarterly payments, each installment payable at the beginning
of each period. The rate of interest is 24% compounded quarterly. What is the amount of each payment
for the phone?
A.
5,098.09
B.
6,975.87
C.
7,371.91
D.
8,054.98
ANSWER: C
100,000 invested today in a fund that pays 25% interest compounded annually. 3 yrs later, you borrow
50,000 with interest of 20% annually in a bank and invest to the fund. 2 yrs later, you withdraw enough
money from the fund to repay the bank loan and all interest due on it. 3 yrs from this withdraw you start
taking 20,000 per year in the fund. After 5 withdrawals, you withdraw the balance in the fund. How
much was withdrawn?
A.
1 Million
B.
1.3 Million
C.
1.6 Million
D.
1.9 Million
ANSWER: B
How much should you pay at the end of 7 years if you loan 2000 at 8% simple interest for 4 years. At the
end of this period, you extended the loan for 3 years, without the interest being paid, but the new
interest is 10% compounded semi-annually.
A.
2,640
B.
4,983
C.
8,098
D.
3,537
ANSWER: D
Dr. Doque borrowed P3000 to be paid after 1 ½ years with interest at 12% compounded semiannually
and P5,000 to be paid after 3 years at 12% compounded monthly. What single payment must she pay
after 3 ½ years at an interest rate of 16% compounded quarterly to settle the two obligations?
A.
P12,627.59
B.
P11,839.97
C.
P15,392.63
D.
P13,435.69
ANSWER: A
If a mechanical engineer borrowed money from his girlfriend with simple interest of 12%, determine the
present worth of P75,000.00 which is due at the end of 7 months.
A.
P72,200.20
B.
P70,200.20
C.
P73,900.50
D.
P70,093.20
ANSWER: D
The sum of P15,000, deposited in an account earning 4% per annum compounded quarterly, will become
P18,302.85. Determine the effective rate of interest per year.
A.
3.06%
B.
4.06%
C.
5.06%
D.
6.06%
ANSWER: B
If a machine is purchased on instalment and the buyer makes an P80,000.00 down payment and owes a
balance of P150,000 in 2 years. Determine the machine cash value if money is worth 14% compounded
quarterly.
A.
P199,312.00
B.
P183,912.00
C.
P193,912.00
D.
P139,912.00
ANSWER: C
The salary of an employee’s job has five levels, each one 5% greater than the one below it. Due to
circumstances, the salary of the employee must be reduced from the top (fifth) level to the second level,
which means a reduction of 3000.00 per month. What is the employees present salary per month?
A.
P22,032.50
B.
P23,022.50
C.
P22,320.50
D.
P22,302.50
ANSWER: A
If the loan was for 15 months at 16.8% interest a year and the repayment on a loan was P12,100.00, how
much was the principal?
A.
P8,500.00
B.
P9,500.00
C.
P10,000.00
D.
P10,500.00
ANSWER: B
The sum of P15,000, deposited in an account earning 4% per annum compounded quarterly, will become
P18,302.85. Determine the effective rate of interest per year.
A.
3.06%
B.
4.06%
C.
5.06%
D.
6.06%
ANSWER: B
Find the number of years when P2,500.00 is compounded to P5,800.00 at 12% compounded quarterly.
A.
6.12 years
B.
7.12 years
C.
8.12 years
D.
5.12 years
ANSWER: B
What is the effective rate equivalent of 12% compounded quarterly?
A.
12.55%
B.
11.55%
C.
12.98%
D.
13%
ANSWER: A
What rate compounded quarterly is equivalent to 14% compounded semi-annually?
A.
10.76%
B.
11.76%
C.
12.76%
D.
13.76%
ANSWER: D
Celestino owes P500, due in 3 years and P800 due in 7 years. He is allowed to settle these obligations by
a single payment on the 6th year. Find how much he has to pay on the 6th year if money is worth 14%
compounded semi-annually.
A.
P1,449.12
B.
P1,559.12
C.
P1,339.12
D.
P1,669.12
ANSWER: A
What is the simple interest rate if an investment of P37,500.00 accumulates to P45,937.5 in 18 months?
A.
0.15
B.
0.20
C.
0.21
D.
0.3
ANSWER: A
A machine is purchased for P500,000.00. The salvage value in 25 years is P100,000.00. What is the
depreciation in the first three years using straight line method?
A.
P24,000.00
B.
P32,000.00
C.
P48,000.00
D.
P16,000.00
ANSWER: C
How much must be deposited at 6% each year on January 1, year 1, in order to accumulate P5,000.00 on
the date of the last deposit, January 1, year 6?
A.
P676.24
B.
P766.24
C.
P667.2
D.
P626.24
ANSWER: A
The management of a certain company deposits P1,500.00 for each of its employees in a retirement
fund at the end of each year for the next 12 years. How much is each employee’s fund at the end of 12
years if it accumulates 8% for the first 8 years and 6% for the last 4 years?
A.
P27,705
B.
P26,705
C.
P24,705
D.
P23,705
ANSWER: B
An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the end
of the period. Compute the depreciation charge and its book value after 10 years using straight line
method.
A.
d = P14,666.67; BV = P103,333.30
B.
d = P14,666.67; BV = P105,666.67
C.
d = P13,333.33; BV = P103,333.30
D.
d = P13,333.33; BV = P105,666.67
ANSWER: A
An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the end
of the period. Compute the depreciation charge and its book value after 10 years using declining balance
method.
A.
d = P9,456.78; BV = P67,456.98
B.
d = P8,987.45; BV = P60,832.80
C.
d = P9,235.93; BV = P60,832.80
D.
d = P9,235.93; BV = P59,987.34
ANSWER: C
An equipment costing P250,000 has an estimated life of 15 years with a book value of P30,000 at the end
of the period. Compute the depreciation charge and its book value after 10 years using the sum of year’s
digit method.
A.
d = P11,000; BV = P67,500
B.
d = P10,500; BV = P58,000
C.
d = P11,500; BV = P60,000
D.
d = P11,000; BV = P57,500
ANSWER: D
An asset costing P50,000 has a life expectancy of 6 years and an estimated salvage value of P8,000.
Calculate the depreciation charge at the end of the fourth period using fixed-percentage method.
A.
P7144.20
B.
P5264.00
C.
P3878.40
D.
P2857.60
ANSWER: B
A machine costing P45,000 is estimated to have a salvage value of P4,350 when retired at the end of 6
years. Depreciation cost is computed using a constant percentage of the declining book value. What is
the annual rate of depreciation in %?
A.
33.25%
B.
32.25%
C.
35.25%
D.
34.25%
ANSWER: B
An engineer bought an equipment for P500,000. Other expenses including installation amounted to
P30,000. At the end of its estimated useful life of 10 years, the salvage value will be 10% of the first cost.
Using straight line method of depreciation, what is the book value after 5 years?
A.
P281,500.00
B.
P291,500.00
C.
P301,500.00
D.
P271,500.00
ANSWER: B
Determine the amount of P21,293.00 invested for the period of February 23,2016 to November 11,2016
at 15% interest.
A.
Php 2286.38
B.
Php 23579.38
C.
Php 19006.62
D.
Php 2371.89
ANSWER: B
Deborah loan P650,000.00 and has 9% simple interest for 5 years. At the end of this period the loan was
extended for 4 years, without the interest being paid, but the new interest rate was made 5%
compounded monthly. How much should Deborah pay at the end of 9 years.
A.
Php 942,500.00
B.
Php 1,150,693.87
C.
Php 1,298,098.98
D.
Php 726,281.09
ANSWER: B
Engr. Jayson bought a machine worth P1,550,000.00 if paid in in cash. On the installment basis, he paid a
down payment of P500,000.00; P350,000.00 at the end of 2 years; P650,000.00 at the end of 4 years and
the final payment at the end of 6 years. What was the final payment if interest was 10%?
A.
Php 561,204.05
B.
Php 298,025.80
C.
Php 364,936.09
D.
Php 653,086.69
ANSWER: A
Find the nominal rate which if converted semi-annually could be used instead 15% compounded
quarterly. What is the corresponding effective rate?
A.
13.65%
B.
12.67%
C.
15.28%
D.
16.08%
ANSWER: C
Roy wishes to have P 1,000,000 in a certain fund at the end of 5 years. How much should he invest in a
fund that will pay 22% compounded continuously?
A.
Php 332,871.08
B.
Php 152,097.98
C.
Php 213,926.54
D.
Php 189,212.87
ANSWER: A
The place where buyers and sellers come together.
A.
Market
B.
Business
C.
Recreation center
D.
Buy and sell section
ANSWER: A
A market whereby there is only one buyer of an item for which there are no good substitute.
A.
Monopsony
B.
Oligopoly
C.
Monopoly
D.
Oligopoly
ANSWER: C
Consists of the actual counting or determining of the actual quantity of the materials on hand as of a
given data.
A.
Physical inventory
B.
Material update
C.
Technological assessment
D.
Material count
ANSWER: A
An evil wrong committed by a person damaged another person’s property or reputation is.
A.
Tort
B.
Material breach
C.
negligence
D.
fraud
ANSWER: A
The quantity of a certain commodity that is offered for sale at a certain place at a given place and time.
A.
Demand
B.
Supply
C.
Stocks
D.
Goods
ANSWER: B
Work-in process is classified as.
A.
An asset
B.
A liability
C.
an expenses
D.
an owner’s equity
ANSWER: A
What is the highest position in the corporation?
A.
President
B.
Board of Directors
C.
chairman of the board
D.
Stockholders
ANSWER: C
Type of ownership in business where individuals exercise and enjoy the right in their own interest.
A.
Equitable
B.
Public
C.
Private
D.
Pure
ANSWER: C
We may classify an interest rate which specifies the actual rate of interest on the principal for one year
as.
A.
Nominal rate
B.
Rate of return
C.
exact interest rate
D.
effective rate
ANSWER: D
An association of two or more individuals for the purpose of operating a business as co-owners for
profit.
A.
Sole proprietorship
B.
Company
C.
Partnership
D.
Corporation
ANSWER: C
It is defined to be the capacity of a commodity to satisfy human want.
A.
Discount
B.
Luxury
C.
Necessity
D.
Utility
ANSWER: B
This occurs in a situation where a commodity or service is supplied by a number of vendors entering the
market.
A.
Perfect competition
B.
Oligopoly
C.
monopoly
D.
Elastic demand
ANSWER: A
These are product or services that are desired by human and will be purchased it money is available after
the required necessities have been obtained.
A.
Utilities
B.
Necessities
C.
luxuries
D.
product goods and services
ANSWER: C
A condition where only few individuals produce a certain product and that any action of one will lead to
almost the same action of the others.
A.
Oligopoly
B.
Semi-monopoly
C.
monopoly
D.
perfect competition
ANSWER: A
Grand total of the assets and operational capability of a corporation.
A.
Authorized capital
B.
Investment
C.
Subscribed capital
D.
money market
ANSWER: A
Chlara invested 550,000 pesos at an interest of 11% semi-annually. What will be the final amount of her
investment, in terms of today’s pesos, after 6 years, if the inflation rate is 9% per year.
A.
439,480.39
B.
623,495.35
C.
613,3396.90
D.
578,345.89
ANSWER: B
Due to Pandemic the economy of our country experiencing inflation at an annual rate of 10%. If this
continues in 3 years, what will be the worth of 100 pesos in terms of today’s peso.
A.
75.13
B.
89.76
C.
71.98
D.
69.45
ANSWER: A
You lend money from a bank to buy a house worth 6.5 million pesos. Your agreement is to pay monthly
for 30 years. What will be your monthly payment if the money interest 3% compounded monthly?
A.
27,404.26
B.
20,876.98
C.
30,759.56
D.
25,986.09
ANSWER: A
Ling deposit 100,000 pesos annually in ABC bank for 5 years. Thereafter, Layla withdraw 50,000 pesos
annually for 4 years. How much money left in year 11 if the interest is 6% annually?
A.
458,975.98
B.
553,866.48
C.
653,201.86
D.
489,926.09
ANSWER: B
Miya deposits 10,000 pesos in a savings account on the day her child is born. She deposits an additional
1000 pesos on every birthday after that. The account has a 5% nominal interest rate, compounded
continuously. How much money will be in the account the day after the child’s 21st birthday?
A.
64,808.45
B.
55,976.98
C.
78,473.23
D.
89,864.09
ANSWER: A
Mr. Momo borrowed 16,000 pesos two years ago. The repayment terms of the loan are 12% interest for
10 years and uniform annual payments. He just made his second payment. How much principal, most
nearly, does he still owe?
A.
14,069
B.
13,096
C.
12,456
D.
17,974
ANSWER: A
A shoes presently costs P1000. If inflation is at the rate of 8% per year, what will be the cost of the item
in two years?
A.
P 857.34
B.
P 1000.00
C.
P 982.78
D.
P 1166.40
ANSWER: D
What is the present worth of P500 deposited at the end of every three months for 6 years if the interest
rate is 12% compounded semiannually?
A.
P8,504
B.
P7,690
C.
P9,568
D.
P6,759
ANSWER: A
Vale wishes to set up a special fund by making uniform semiannual end-of-period deposits for 20 years.
The fund is to provide P 100,000 at the end of each of the last five years of the 20-year period. If interest
is 8% compounded semiannually, what is the required semiannual deposit to be made?
A. P 5,879.89
B. P 7,987.45
C. P 4,879.56
D. P 6,193.39
ANSWER: D
If P 10,000 is deposited each year for 9 years, how much annuity can a person get annually from the
bank every year for 8 years starting 1 year after the 9th deposit is made. Cost of money is 14%.
A.
P 43,576
B.
P 34,675
C.
P 45, 376
D.
P 37, 465
ANSWER: B
Elena has a debt of P 40,000 whose interest rate is 15% compounded semiannually, is to be discharged
by a series of 10 semiannual payments, the first payment to be made 6 months after consummation of
the loan. The first 6 payments will be P 6,000 each, while the remaining 4 payments will be equal and of
such amount that the final payment will liquidate the debt. What is the amount of the last 4 payments.
A.
P 4,568
B.
P 8,986
C.
P 6,456
D.
P 5,454
ANSWER: D
Mario bought a 72 inches TV costing P 60,000 payable in 12 quarterly payments, each installment
payable at the beginning of each period. The rate of interest is 24% compounded quarterly. What is the
amount of each payment?
A.
P 7,371.91
B.
P 6,987.98
C.
P 4,780.12
D.
P 8,628.26
ANSWER: A
Dave deposits P 50,000 in a bank account at 6% compounded monthly for 5 years. If the inflation rate of
6.5% per year continues for this period will this effectively protect the purchasing power of the original
principal?
A.
YES
B.
MAYBE
C.
NO
D.
I do not care
ANSWER: C
Determine the present worth of an annuity consisting of 6 payments of P 120,000 each, the payment are
made at the beginning of each year. Money is worth 15% compounded annually.
A.
P 52,226.40
B.
P 120,801.60
C.
P 35,876.98
D.
P 134,879.78
ANSWER: A
Jerwin paid 10% down payment of P200,000 for a house and lot and agreed to pay the balance on
monthly installments for ‘x’ years at an interest rate of 15% compounded monthly. If the monthly
installment was P42,821.87, find the value of x?
A. 11
B. 9
C. 5
D. 7
ANSWER: A
UIC wishes to give each 80 employees a holiday bonus. How much is need to invest monthly for a year at
12% nominal interest rate compounded monthly, so that each employee will receive a P2,000 bonus?
A. P12,608
B. P12,610
C. P12,600
D. P12,300
ANSWER: D
Jessa bought a brand-new watch costing P12,000 if paid in cash. However, she can purchase it on
installment basis to be paid within 5 years. If money is worth 8% compounded annually, what is her
yearly amortization if all payments are to be made at the beginning of each year?
A. P2,782.85
B. P2,872.58
C. P2,400.00
D. P2,827.58
ANSWER: A
Engr. Blaize borrowed P10,000 at 12% interest and paid P2,000 per annum for the last 4 years. What
does he have to pay at the end of the fifth year in order to pay off his loan?
A. P6,919.28
B. P5,674.00
C. P6,074.00
D. P3,296.00
ANSWER: C
Find the present value of a perpetuity of P 30,000 payable
compounded bi-monthly.
A.
1,406,794
B.
2,319,126
C.
1,411,765
D.
2,117,647
quarterly if money is worth 8.5%
ANSWER: A
A house and lot can be acquired by a downpayment of P500,000 and a yearly payment of P100,000 at
the end of each year for a period of 10 years, starting at the end of 5 years from the date of purchase. If
money is worth 14% compounded annually, what is the cash price of the property?
A. P810,100
B. P808,811
C. P801,900
D. P805,902
ANSWER: B
A loan was to be amortized by a group of four end-of year payments forming an arithmetic progression.
The initial payment was to be P5,000 and the difference between successive payments was to be P400.
But the loan was renegotiated to provide for the payment of equal rather than uniformly varying sums. If
the interest rate of the loan was 15%, what was the annual payment?
A. P4530.51
B. P6530.51
C. P5530.51
D. P7530.51
ANSWER: C