Question

woman borrowed P3,000 to be paid after 16 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 years at an interest rate of 16% compounded quarterly to serile the two obligations? Ans P12. 627.59 10. Mr.J de la Cruz borrowed money from a bank. He received from the bank P1.342 and promise to repay P1,500 at the end of 9 months. Determine the simple interest rate and the corresponding discount rate or often referred to as the "Banker's discount." Ans 11.7% 10.53% 1. Aman deposits P50,000 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 Ans No: P49 225

Answer 1

9. Effective Annual Rate(EAR)= {(1+rate/compounding period)^compounding period}-1

EAR for 3000 @ 12% semianually for 1.5 years = 12.486%

EAR for 5000 @ 12% monthly for 3 years = 12.73%

EAR for 16% semianually for 3.5 years = 17.24%%

Amount of 3000 after 1.5 years @ 12.486% = 3570

And the Amount of 3570 after 2 years @ 17.24% = 4907

Amount of 5000 after 3 years @ 12.73% = 7163

And the Amount of 7163 after half year @ 17.24% = 7780

Total amount to be paid at single payment = 4907+7780= $12,687 (difference in answer due to approximation)

10.   Simple Interest rate= (1500-1342) / 1342 = 0.117 or 11.7%

Corresponding discount rate = 11.7*9/10 = 10.53%

11.

Effective Annual Rate= {(1+rate/compounding period)^compounding period}-1

	Effective Annual Rate	0.0618 or 6.18%
Year	X	Y	X*Y
1	3090	0.9390	2901.408451
2	3090	0.8817	2724.327184
3	3090	0.8278	2558.053694
4	3090	0.7773	2401.928351
5	53090	0.7299	38749.37361
		Total	49335.09129

(difference in answer due to approximation)