Engineering Economy Set 1

Simple Interest
1. If a man borrowed money from his
girlfriend with simple interest rate of
12%, determine the present worth of
P75, 000.00, which due at the end of
seven months.
a) 60,093
b) 80,250
c) 66,964
d) 70,093
2. Clara has invested P 1,000.00, part at
5% and the remainder at 10% simple
interest. How much is invested at
higher rate if the total annual interest
from this investment is P 95.00?
a) 900.00
b) 890.00
c) 100.00
d) 110.00
3. Daisy borrowed money from a certain
financing firm. She received P
1,842.00 from the firm and promised
to pay P 2,000.00 at the end of ten
months. What is the simple interest
rate?
a) 10.3 %
b) 13.0%
c) 11.8%
d) 15.3%
4. Determine the accumulated amount
using exact simple interest on P
1,000.00 for the period from January
20, 1990 to November 28 of the same
year at 15% interest rate.
a) 1282
b) 1128
c) 1130
d) 2400
Compound Interest
1. If the sum of P 12,000 is deposited in
an account earning interest rate of 9%

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compounded quarterly, what will it
become after 1 year?
a) P 13,080
b) P 13,117
c) P 12,270
d) P 16,939

2. In the previous problem, what is the

effective rate?
a) 9.81 %
b) 9 %
c) 9.31 %
d) cant solve
3. What is then the equivalent nominal
interest rate if compounded monthly?
a) 8.93 %
c) 8.39 %

b) 9.38 %
d) cant solve

7. Determine the effective rate of interest

corresponding to 18% compounded
daily.
Ans. 19.72%
a) 13.75%
b) 18.74%
c) 19.72%
d) 17.92%

8. What is the equivalent nominal interest

compounded
quarterly
of
12%
compounded
semi-annually?
Ans.
11.825 %
a) 10.125%
b) 11.825%
c) 9.175%
d) 10.875%

4. How many years are required for P Annuity

1,000 to increase to P 2,000 if invested
1. An investment of m pesos is made at
at
9%
per
year
compounded
the end of each year for three years, at
continuously?
an interest rate of 9% per year
a) 7.70 years
b) 8.04 years
compounded annually. What will the
c) 7.87 years
d) 6.05 years
peso value of the total investment be
upon the deposit of the third payment?
5. What payment X ten years from now is
a) 3.278 m pesos
b) 2.278 m pesos
equivalent to a payment of P 1,000 six
c) 1.127 m pesos
d) 3.728 m pesos
years from now, if interest is 15%
compounded monthly?
2. The president of a growing engineering
a) P 1,749.01
b) P 1,815.35
firm wishes to give each of 50
c) P 1,900.00
d) P 1,617.45
employees a holiday bonus. How much
6. If the sum of P 12,000 is deposited in
an account earning interest rate of 9%
compounded quarterly, what will it
become at the end of 8 years? Ans.
P24,457
a) P 21,235
b) P 24,457
c) P 25,178
d) p 20,163

is needed to invest monthly for a year

at
12%
nominal
interest
rate,
compounded monthly so that each
employee will receive a P 1,000 bonus?
a) P 2,750.00
b) P 3,942.44
c) P 4,311.78
d) P 3,892.15
3.

A fund is to provide an annual

scholarship at P4,000 for the first 5
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Engineering Economy Set 1

years; P6,000 for the next 5 years and
P9,000 thereafter. The fund will be
established 1 year before the first
scholarship is awarded. If the fund
earns 12% interest, what sum must be
deposited?
a) P 50, 840
b) P 60, 921
c) P 45, 076
d) P 12,632

Uniform Arithmetic Gradient

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1. Annual deposits were made in the fund
earning10% per annum. The first
deposit was 2,000 and each deposit
thereafter was 200 less than the
preceding one. Determine the amount
in the fund after sixth deposit.
a) 9,000
b) 10,000
c) 11,000
d) 12,000

every year. What is

of the maintenance
if i = 8%?
Ans. P 8,728.79
a) P 8,728.79
c) P 7,685.40

the present worth

costs for six years

b) P 8,181.82
d) P 9,574.56

Geometric Gradient
1. Annual maintenance costs for a
machine are P1,500 this year and
estimated to increase 10% each year

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