SIMPLE AND COMPOUND INTEREST ACTIVITY #1 BES-EE: Engineering Economics I. Simple Interest 1. Determine the simple interest on P6000 for 9 months and 10 days if the rate of interest is 12%. 2. What is the annual rate of interest if P265 is earned in four months on an investment of P15,000? 3. What is the exact simple interest of P2000 if invested at 15% from January 23, 1995, to March 12, 1995? 4. How long must a P4000 note bearing 4% simple interest run to amount P4,135? 5. If P1,600 earns P48 in 9 months, what is the annual rate of interest? 6. 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? 7. What is the ordinary simple interest on P700 for 8 months and 15 days if the rate of interest is 15%? 8. Mr. Dela Cruz borrowed money from a bank. He received from the bank P134.00 and promised to pay P1500.00 at the end of 9 months. Determine the simple interest rate. 9. Annie buys a television set from a merchant who asks P1250.00 at the end of 60 days. Annie wishes to pay immediately, and the merchant offers to compute the cash price on the assumption that money is worth 8% simple interest. What is the cash price today? 10. A bank charges 12% simple interest on a P300.00 loan. How much will be repaid if the loan is paid back in one lump sum after three years? 11. Determine the exact simple interest on P500 for the period from January 10 to October 28,2012 at 16% interest. 12. A man wants to invest a sum of P50,000 in two investments. The first investment earns a rate of interest 4 times that of the second investment. In 3 years the first investment grows to P37,200. For 10 years, the second investment grows to P24,000. a. Find the sum invested in each rate of interest. b. Find the rate of interest of each. 13. $ 2,900.00 is borrowed for 29 days at 29% per annum simple interest. How much will be due at the end of 29 days? 14. Engr. Nicole deposited to the bank worth $ 250,000.00 was made for 56 days. the net interest was $ 2,107.56 after deducting the 35% tax. find the rate of return annually. 15. The amount of P20,000 was deposited in a bank earning an interest of 6.5% per annum. Determine the total amount at the end of 7 years if the principal and interest were not withdrawn during this period. 16. If you borrowed money from your friend with simple interest of 12%, find the present worth of P50,000.00 which is due at the end of 7 months. 17. Mr. Reyes borrowed money from the bank. He received from the bank P1,842 and promised to repay P2,000 at the end of 10 months. Determine the simple interest. II. Compound Interest 1. At an annual rate of 8%, what is the future worth of P100 at the end of 4 years? 2. If you borrow money from your friend with interest rate of 12%, find the present worth of P20,000, which is due at the end of nine months. 3. A person pays interest on a loan semiannually at a nominal annual interest rate of 16%. What is the effective annual interest rate? 4. A man borrowed P100,000 at the interest rate of 12% per annum compounded quarterly. What is the effective rate? 5. By condition of a will, the sum of P20,000 is left to a girl to be held in trust by her guardian until it amounts to P50,000. When will the girl receive the money if the fund is invested at 8% compounded quarterly? 6. At what rate of annual interest will an investment quadruple itself in 12 years? 7. How many months at an interest rate of 1 percent per month does money have to be invested before it will double in value? 8. A bank is advertising 9.5% accounts that yield 9.84% annually. How often is the interest compounded? 9. What is the interest rate compounded monthly is equivalent to 10% effective rate? 10. If a credit pays 4.125% interest compounded quarterly, what is the annual interest rate? 11. A nominal rate of 12% compounded semi-monthly will have an effective rate of how much? 12. At a certain interest rate compounded semi-annually, P5000 will amount to P20,000 after 10 years. What is the amount at the end of 15 years? 13. The purchase price of a car is P25,000. Mr. smith makes a down payment of P5,000 and borrows the balance from a bank at 6% interest for 5 years. Calculate the nearest value of the required monthly payments to pay-off the loan. 14. P200,000 was deposited on January 1, 1998, at an interest rate of 24% compounded semi-annually. How much would be the sum on January 1, 1993? 15. A man planned to endow P1 million to his son’s 21st birthday. How much is his semi-annual deposit in a special account that earns 5% compounded quarterly if the first deposit was made when the son was 4 ½ years old? 16. 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 semi-annually? 17. What rate of interest compounded annually is the same as the rate of interest of 8% compounded quarterly? 18. A person invests P450 to be collected in eight years. Given that the interest rate on the investment is 14.5% compounded annually, what sum in pesos will be collected eight years? 19. What is the effective rate corresponding to 16% compounded daily? Take 1 year = 360 days. 20. P1500 was deposited in a bank account, 20 years ago. Today, it is worth P3000. Interest is paid semi-annually. Determine the interest rate paid on this account. 21. P5000 is put into an empty savings account with a nominal interest rate of 5%. No other contributions are made in the account. With monthly compounding, how much interest will have been earned after 5 years? 22. Determine the accumulated value of P2,000 in 5 years if invested at 11% compounded quarterly. 23. 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. 24. Find the number of years when P2,500 is compounded to P5,800 if invested at 12% compounded quarterly. 25. What rate compounded quarterly is equivalent to 14% compounded semi-annually? 26. A 40-year-old consulting engineer wants to set up a retirement fund to be used starting at age 65. P20,000 is invested now at 6% compounded annually. Approximately how much will be in the fund at retirement? 27. What is the future worth of P1000.00 at the end of 4 years if the annual rate of interest is 8% compounded annually? 28. How long will it take money to double itself if invested at 5% compounded annually? 29. Fifteen years ago, P1000 was deposited in a bank account and today it is worth P2,370. The bank pays interest semi-annually. What is the interest rate paid on this account? 30. If P25,000 is invested now, P35,000 two years from now, and P45,000 four years from now (all at 4%), what will be the total amount in 10 years? 31. You deposit $1000 into a 9% account today. At the end of 2 years, you will deposit another $3000. In five years, you plan a $4000 purchase. How much is left in the account one year after the purchase? 32. A man bought a lot worth P1,000,000 if paid in cash. On the installment basis, he paid a down payment of P200,000; P300,000 at the end of one year; P400,000 at the end of 3 years and a final payment at the end of 5 years. What was the final payment if interest was 20%?
