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Kippap-Handout-MSTE (27 Econ - Miscellaneous 2)
BS Civil Engineering (University of Manila)
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KIPPAP EDUCATION
27 Econ: Miscellaneous 2
INSTRUCTION: Select the correct answer for each of the following questions.
Mark only one answer for each item by shading the box corresponding to the
letter of your choice on the answer sheet provided. STRICTLY NO ERASURES
ALLOWED.
1. A businessman invested P80,000 in a startup where he expects a yearly
revenue of P25,000 and yearly operating costs of P6,000. If the business is
expected to run for 10 years, find the benefit-cost ratio. Yearly interest
is 12%.
A. 2.94
C. 1.34
B. 8.62
D. 5.72
2. Having bought additional equipment for his company, the business owner
estimates the annual expenses to be cut by 20%. The price of the equipment
is P90,000 and its annual operating cost is P4,500. If the company's annual
expenses before the installation amount to P180,000, find the rate of return
of purchasing the equipment, given that after 6 years, the equipment will be
worthless. Interest rate is 12%.
A. 20.6%
C. 24.4%
B. 22.7%
D. 26.2%
3. In the previous question, determine its recovery period.
A. 5.2 years
C. 6.5 years
B. 2.5 years
D. 4.4 years
4. A company has a working capital of P30 and a fixed capital of P50M. Annual
net profit is expected to be P20M and depreciation amounts to P3M. Compute
for the payout period.
A. 2.17 years
C. 4.45 years
B. 6.41 years
D. 1.22 years
5. In the previous question, determine its recovery period.
A. 4 years
C. 6 years
B. 5 years
D. 3 years
6. Determine the capital recovery factor for a uniform series of payments
over 6 years if interest rate is 8%.
A. 0.2852
C. 0.2962
B. 0.2650
D. 0.2163
7. The government is issuing bonds worth P70M for its "Build Build Build"
project, which are to be repaid over a 50-year period. If interest rate is
6%, determine the annual dividend required for the bond.
A. P4,410,260
C. P4,380,800
B. P4,120,900
D. P4,200,000
Kippap Education
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kippapeducation@gmail.com
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KIPPAP EDUCATION
27 Econ: Miscellaneous 2
8. A man bought a government bond which cost P200,000 and will pay P10,000
interest each year for 20 years. The bond will mature at the end of 20 years
and he will receive the original P200,000. If there is a 2% annual inflation
during this period, what rate of return will the investor receive after
considering the effect of inflation.
A. 2.62%
C. 2.94%
B. 6.04%
D. 4.83%
9. A stock from Jollibee Foods Corp. currently sells at P139.50. This year,
the dividend for each stock is at P12 and is expected to grow 5% per year.
What is the rate of return?
A. 14%
C. 20%
B. 16%
D. 15%
10. A stock from BDO Unibank Inc. currently sells at P19.09 per share and
will pay a dividend of P3 per year which is expected to increase at an
average of "x%" per year. If the company's rate of return is at 25%, find
the value of x.
A. 4.26
C. 2.58
B. 9.28
D. 5.29
Kippap Education
0905 664 2628
kippapeducation@gmail.com
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