ENGINEERING ECONOMICS
1. Determine the ordinary simple interest on P10,000 for 9 months and 15 days if the rate of interest
is 6%.
a. P475 c. P467.21
b. P468 d. NOTA
2. Determine the exact simple interest on P20,000 for the period from January 15 to November 15,
2012 if the rate of simple interest is 5%.
a. P847.22 c.P833.33
b. P835.16 d. NOTA
3. You loan from a bank the amount of P100,000 with a rate of simple interest of 20% but the interest
was deducted from the loan at the time the money was borrowed. If at the end of 1 year, you have
to pay the full amount of P100,000, what is the actual rate of interest?
a. P80,000 c. i = 20%
b. i = 25% d. NOTA
4. Mr. Dee Jay borrowed money from the bank and he received the amount of P18,420 and promised
to repay P20,000 at the end of 10 months. Determine the rate of simple interest.
a. i = 10.29% c. i = 8.58%
b. P = 1,580 d. NOTA
5. If P50,000 is borrowed for 90 days at 8% per annum simple interest. How much will be due at the
end of 90 days?
a. P50,986 c. P51,000
b. i = 8% d. NOTA
6. On his recent birthday on April 18, 2012, Cai was given by his mother a certain amount of money
as birthday present. He decided to invest the said amount on a 12% exact simple interest. If the
investment will mature on Christmas day at an amount of P15,000, how much did Cai receive from
his mother on his birthday?
a. P13,859.37 c. P15,000
b. P13,841.47 d. NOTA
7. Carle borrowed money from Cy with simple interest of 12%. Find the present worth of P50,000
which is due at the end of 6 months.
a. P74,691.18 c. P47,169.81
b. P50,000 d. NOTA
8. A loan of P5,000 is made for a period of 15 months at a simple interest rate of 15%. What future
amount is due at the end of the loan period?
a. P5,750.00 c. P5,600.00
b. P5,937.50 d. NOTA
9. Ciel borrowed P20,000 from the bank and promised to pay the amount after one year. He received
the amount of P19,200 after the bank collected an advance interest of P800. What was the rate of
discount and the rate of interest that the bank collected in advance?
a. d=4%; i=4.17% c. P19,200; P20,000
b. i=4%; d=4.17 d. NOTA
10. You pawned your PSP for P5,000 and agreed to pay the amount at the end of 9 months. The
pawnshop gave you P4,000 cash after deducting the interest in advance. What was the rate of
discount?
a. i = 20% c. d = 20%
b. d = 25% d. NOTA
11. What was the rate of interest for the problem in # 10?
a. i=20% c. d=25%
b. i=25% d. NOTA
12. If the sum of P15,000 is deposited in an account earning interest at the rate of 8% compounded
quarterly, what will it become at the end of 5 years?
a. P22,039.92 c. P22,289.21
b. P32,866.85 d. NOTA
13. An employee has a promissory note, due 5 years hence, whose maturity value is P70,000. If the
rate of interest is 12% compounded semi-annually, what is the value of this note now?
a. P39,720.82 c. P96,675.79
b. P39,087.63 d. NOTA
14. IEdeas is planning to expand its operations and plans to purchase a parcel of land on which to
construct a building for their review center, which they will need 5 years hence. The current costs
are: land: P2M; building: P3.5M. Since these are not needed immediately, the company plans to
defer the purchase of the land and the construction of the building until they are needed. If the value
of the land and the cost of the building are expected to appreciate at the rates of 10% and 8% per
annum, respectively. What will be the total cost of the investment after 5 years?
a. P8,580,275.74 c. P8,363,668.27 b. P7,244,668.37 d. NOTA
15. A debt of P150,000 was paid for as follows: P40,000 at the end of 3months, P50,000 at the end of
12 months, P30,000 at the end of 15 months, and a final payment F at the end of 21 months. If the
rate of interest is 12% compounded quarterly, find the final payment F.
a. P15,774.56 c. P12,359.52
b. P157,745.58 d. NOTA
16. Adriste Philippines, Inc. expects to retire an existing machine at the end of 2013 and will replace
it with a new machine for the same task at an estimated cost of P600,000. The old machine can be
sold for P50,000 when it is replaced. To provide for replacement, the company intends to deposit
the following amounts in an account earning interest at 8% compounded quarterly:
P200,000 at the end of 2010
P150,000 at the end of 2011
P100,000 at the end of 2012
What additional amount is needed at the end of 2013 to purchase the new machine?
a. P15,774.56 c. P12,359.52
b. P35,952.12 d. NOTA
17. If P500,000 is invested at 8% interest compounded quarterly, how many years will it take for this
amount to accumulate to P900,000?
a. 29.68 c. 14.84
b. 7.42 d. NOTA
18. Charlie wishes to bequeath his youngest son P200,000 ten years from now. What amount should
he invest now if it will earn interest of 6% compounded annually during the first 5 years and 8%
compounded quarterly during the next 5 years?
a. P200,000 c. P100,576.67
b. P134,594.27 d. NOTA
19. Find the nominal rate compounded monthly which is equivalent to 16% compounded quarterly.
What is the corresponding effective rate?
a. r=15.79% ; Eri = 16.98% c. r=16.98% ; Eri=15.97%
b. i=15.97% ; r=16.98% d. NOTA
20. What payment X 10 years from now is equivalent to a payment of P500,000 7 years from now, if
interest rate is 12% compounded semi-annually?
a. P221,150.05 c. P709,259.56
b. P155,902.36 d. NOTA
21. At a certain interest rate compounded annually, P100,000 will become P450,000 in 15 years. What
is the amount at the end of 10 years?
a. P272,638.68 c. P100,000.00
b. P450,000.00 d. NOTA
22. Compare the accumulated values at the end of 5 years if P100,000 is invested at the rate of 12%
per year compounded annually, semi-annually, quarterly, monthly, daily, and continuously. Which
gives the highest return interest.
a. ANNUALLY c. CONTINUOUSLY
b. DAILY d. NOTA
23. An item presently cost Php 1000. If inflation is at the rate of 8% per year, what will be the cost of the
item in two years?
24. An economy is experiencing inflation at annual rate of 8%. If this continues, what will Php 1000 be
worth two years from now, in terms of today’s pesos?
25. A man invested Php 10,000 at an interest rate of 10% compounded annually. What will be the final
amount of his investment, in terms of today’s pesos, after five years, if inflation remains the same at the
rate of 8% per year?