ASSIGNMENT 3 ( PART 1-7.
Due January 6, 2015) b) semi-annually
PART I COMPUTING THE COMPOUND AMOUNT AND
INTEREST
Find the interest rate per conversion period (i) and the total
number of conversion periods (n) at the end of the indicated
time.
1. 8 years at 10% compounder quarterly
2. 4 years at 12% every two months
3. 71⁄2 yrs at 9% compounded semi-annually
4. 3 years and 3 months at 18% compounded quarterly
5. 8 years and 6 months at 12% compounded monthly
6. 96 months at 5% compounded annually
7. 33 months at 18% compounded monthly
8. 1 1⁄2 yrs at 5% compounded semi-annually
9. 11 years at 16% compounded quarterly
10. From April 24, 2008 to July 24, 2012 at 18% compounded
quarterly
PART II
Solve for the value of the unknown:
1. Find the amount and interest of P18,600 invested for 5 years
and 6 months at the rate of 18% compounded
a) monthly
c) quarterly
2. Find the sum of P32,100 invested for 4 years and 3 months
at 18% compounded
a) quarterly
b) monthly
3. Accumulate P18,700 invested for 1 1⁄2 yrs at 8%
compounded
a) semi-annually
b) quarterly
4. Determine the maturity value of a note having a face value
of P26,700 with interest at 11% m = 2 for 8 yrs.
5. Mrs. Dela Cruz invested P70,000 at 12% m =4 for 5 yrs.
And another P70,000 at 18%, m = 6 for the same length of
time. Find the total amount of two investments.
6. Four friends deposited P15,000 each in a trust fund that
gives 15% interest quarterly. Find their total money in 8 years.
7. Mrs. Dimayuga deposits p12,000 in a savings account on
March 30, 2006. Six months later she deposited P6,000. If the
bank credits at 12% m = 4, and no withdrawal has been made,
how much is her money on Dec. 30, 2012?
8. Mrs. Delos Santos has P75,000. One third of it was invested
at 18% m = 2. One fourth of the remaining amount was
invested at 12% m = 4 and the remaining amount was invested
at 12% m =12. Find her total investment in 6 years.
9. Accumulate P26,000 for 90 months (a) at 6% m = 2; (b) at 2. P27,500 12% Monthly 3
3% simple interest. years and 7 months

10. Accumulate P26,900 invested at 12% m =4 in a savings 3. P83,900 10% Quarterly 6

account on May 10, 2010 to Nov. 10, 2012. years and 9 months

11. Mr. Marquez owes me P50,800 due now. He offers to pay 4. P71,520 7% Semi-annually 12
the principal plus the accumulated simple interest at rate of 6% years
at the end of 4 years. I insist on changing 6% compounded
semi-annually. How much more do I receive at the end of 4 5. P68,900 6% annually 15
years? years

12. Find the compound amount and interest of P29,700 if

invested for 8 years and 9 months at 18% compounded
monthly.
13. Find the amount of P56,500 invested for 7 years and 9
months at 12% compounded quarterly.
14. Accumulate P16,800 at 12%; m=12 for 8 1⁄4years.
15. Find the amount of P42,600 at the end of 5 years and 6
months at 10% compounded semi-annually.
COMPUTING THE PRESENT VALUE
PART III
A. Find the present value of each of the ff: amounts:
B. Solve the following problems:
6. Discount P28,500 in 5 years if money is worth 8%
compound quarterly
7. What amount must be invested today at 12%
compound monthly in order to accumulate P150,000 in 6
years?
8. A non-interest bearing note whose face value is
P200,000 may be sold 22 months before maturity. Mr.
Santos is interested to buy the note at 18% m = 4 while
Mr. Bautista. Mr. Santos is interested to buy the note at
18% m = 4 while Mr. Bautista is willing to buy it at 18% m
= 12. To whom must the bearer sell the note.

Amount Nominal Frequency of conversion 9. How much must be invested today in a saving
Term account to realize P85,000 in 5 years if money is worth
10% m = 4?
1. P28,300 8% Every two months 5
years
10. How much must a man deposit in a bank that pays
7% compounded annually so that after 10 years he will
have P3,000,000?
11. What sum is needed to accumulate P90,000 in 8
years if money earns interest of 12% m = 6?
12. How much must a corporation deposit in a bank
which credits interest at 12% m = 12 to come up in 8
years with P2,500,000 needed for its expansion
program?
13. In purchasing a house, a man makes P720,000 down
payment and agrees to pay P1,200,000 5 years later.
Find the cash value of the house is money is worth 14%
compounded semi-annually.
14. On the birth of a child, a father wished to invest in a
trust fund which gives 12% compounded quarterly. How
much must he invest if he wants to accumulate P650,000
by the time the child reaches his 21st birthday?
15. Find the present value of P58,790 due in 4 1⁄2 years
if money is invested at 9% m = 2?
16. To provide for a purchase of a car worth P950,000 as
a gift to his mother five years from now, how much
should Benjamin invest today at 18% compounded
quarterly?
17. If money is worth 8% compounded semi-annually,
find the discount if P38,775 is discounted 4 years.
18. Discount P178,532 for 10 years at 6% compound
annually. Find the discount.
19. If money is worth 10% compounded quarterly find the
present value of P48,750 due in 5 years and 9 months.
20. If money is worth 7% compounded semi-annually,
find the present value of P1,350,265 due in 7 1⁄2 years
LECTURE: READ AND UNDERSTAND
COMPoUND AMOUNT AT A FRACTION OF A PERIOD
In the formula S = P (1+i)n, n is assumed to be an
integer. If n is a fraction, one method of finding the
compound amount is to assume compound interest
throughout the term. However in practice, simple interest
is assumed over the final fractional part of a period.
The method is done as follows:
1. Find the compound amount at the end of the largest
number of whole periods in the given term.
2. Accumulate the result in step 1 for the remaining time
(which is less than a period) at simple interest nominal
rate.
Example 1. Find the compound amount if P7200 is
invested for 3 years and 9 months at 8% compounded
semi-annually, assuming simple interest over the final
fractional part.
Solution:
P = 7,200 i = 4% m=2 j = 8%
t = 3 years & 9 months
n = (33⁄4) (2)
 n = ( 15/4 )(2) 2. Find the compound amount and interest if P10,500 is
invested for 2 years and 8 months at 6% compounded
n = 7 1⁄2 periods semi-annually.
1. Find S ; the largest number of whole periods is 7 ( 3 3. Accumulate P18,500 for 5 years and 10 months at
years and 6 months), thus the compound amount is 12% compounded very two months.
S = P(1+i)n 4. A man borrowed P500,000 from a bank charging 7%
= 7,200(1.04)7 compounded semi-annually on June 20, 2009. How
much must he pay on Aug 20, 2012, to settle his loan.
= 7,200(1.315932)
5. Find the amount of P392,400 at the end of 5 1⁄2 years
S = P9,474.71 if money is worth 6% compounded annually.

2. The remaining time is 3 months, hence accumulate S 7. Find the compound amount of P22,600 invested at 8%
for the remaining 3 months compounded annually from February 6, 2009 to May 6,
2012.
At 8% simple interest.
8. Find the amount of P210,000 if invested at 9%
S = S (1 + rt)
compounded semi-annually for 8 3⁄4 years
= 9474.71 [1 + (.08)(3/12)]
9. On March 15, 2008, Jose borrowed P12,000 from a
= 9474.71 (1 + .02) bank charging 6% compounded annually. If he paid the
accumulated sum on May 15, 2012, how much did he
S = P9664.20 pay?
PART IV 10. Accumulate P98,975 for 8 years and 8 months if it is
invested at 16% compounded quarterly
Solve the following problems assuming simple
interest over the final fractional part. LECTURE: READ AND UNDERSTAND
1. Find the compound amount and interest if P92,000 is PRESENT VALUE AT A FRACTION OF A PERIOD
invested at 12% compound quarterly for 5 years and 4
months. The practice of computing the present value at a
fraction of a period can be done by the following steps:
1. Increase the number of whole periods by one; and 2. Accumulate P1 for 1 month at 12% simple interest to
using the new period discount S. this means we have to find the actual present value.
add a few months to complete the fractional part to one
period. P = P1 (1+rt)

2. Accumulate the result in Step 1 at simple interest, at = (1,565.68 [1+(.12)(1/12)]

the given nominal rate, for the number of months added = 1,565.68(1=.01)
in the first step.
Using a calculator,
Example 1. Find the present value of P3000 due in 5
years and 5 month at 12% compounded quarterly. P = 3,000(1.03)-21 2/3

Solution: = 3,000(0.527060089)

S = P3,000 i = 3% = P1,581.18

j = 12% t = 5 5/12 years PART V Solve each problem completely:

m=4 n = (5 5/12)(4) 1. Find the present value of P29,650 due i 3 years and 7
months at 8% compounded semi-annually.
n = (65/12)(4)
2. Discount P1,085,351 due in 2 years and 5 months at
n = 21 2/3 12% compounded quarterly.
1. The given term consist of 21 whole period. Adding one 3. How much must a man deposit in a bank from June
period it becomes 22 period (or add one month to the 20, 2010 to Aug. 20, 2012 to come up with half a million
given term). Discount P3000 for 22 periods (or for 5 pesos? The bank credits interest at 10% compounded
years and 6 months) and obtain the value of P1. quarterly.
P1 = S (1+i)-n 4. Find the present value of P18,000 due in 4 years and 2
= 3,000 (1.03)-22 months at 9% compound annually.

= 3.000(0.521893) 5. what amount must be invested today at 18%

compound quarterly in order to accumulate P72,500 in 10
P1 = P1,565.68 years and 8 months?
6. Discount P96,70 due in 4 years and 8 months at 12%
m = 2.
B. Solve the following problems.
7. If the bank credits interest at 8% converted semi-
annually, find the present value of P150,000 which is due 6. At what nominal rate compounded semi-annually, will
in P7800 accumulate to P10,200 for 2 yrs. and 6 months?

a. 5 years and 3 months 7. At what nominal rate converted quarterly is P55,000

the present value of P97,083 which is due in 5 years?
b. 12 years and 2 months
8. If an investment accumulates from P68,000 to P83,000
8. What sum is needed to accumulate P496,530 in 5 in 4 years, what is the nominal rate compounded
years and 2 months if money is worth 8% compound quarterly allowed?
quarterly.
9. At what nominal rate converted quarterly will money
9. To provide for a purchase of a car worth P778,000 as triple itself in 5 years?
a gift to his child when he graduates five years and 3
months from now, how much should a father invest today 10. If P25,000 earned interest of P18,000 in 2 years, at
at 12% compounded semi-annually? what nominal rate compounded annually was the money
invested?
10. Discount P150,000 for 8 years and 3 months at 6% m
= 2. 11. A sister plans to invest p60,000 on the 7th birthday of
her younger sister. If she wishes to double the money at
PART VI Finding the UNKNOWN RATE the end of 5 years for the high school education of her
sister, at what nominal rate converted monthly should
A. Find the value of i and j in each of the following she invest the money?
P S m Term 12. At what nominal rate converted semi-annually will
1. P500 P620 Quarterly 3 years P201,500 accumulate to P320,000 in 12 years.

2. P6,500 P9,000 Semi-annually 5 years 13. At what nominal rate converted quarterly will P65,000
ve four times as much in 9 years?
3. P6,850 P10,400 Monthly 21⁄2 yrs.
14. A debtor borrows p380,000 and agrees to pay
4. P920 P1,670 Annually 10 yrs. p687,316 in 6 years. At what nominal rate compounded
quarterly will he be paying the interest?
5. P9,500 P14,200 quarterly 7 years
15. Marie wants to invest P10,000 in a bank for 8 years (1.04)n = 1.25
and 9 months. At what nominal rate converted quarterly
should the money be deposited to eran P8,000 interest. Taking the logarithm of both sides,

Lecture: READ AND UNDERSTAND log_((1.04))⁡n = log⁡1.25

FINDING THE UNKNOWN TERM n log⁡1.04 = log⁡1.25

Problem on investment oftentimes require the n = log⁡1.25/log⁡1.04 t=

solution of the term of the transaction, it is necessary to n/m
determine how long a given investment will accumulate
n = 0.096910/0.017033 t=
to a desired amount. Solving by the use of linear
5.68/2
interpolation gives sufficient accuracy.
n = 5.689544 t = 2.84 years or
approximately
Example 1: At 8% m = 2, how long with it take for p4800
2 years
to accumulate to P6000?
and 10 months
Solution:
From the formula S = P(1+i)n+, n = mt. So to solve for t,
a) 4,800(1+i)n = 6000 (1+i)mt = S/P

(1+i)n = 6,000/4,800 log⁡〖(1+i)^mt 〗 = log⁡〖S/P〗

(1 + 4%)n = 1.25
mt log⁡〖(1+i)〗 = log⁡〖S/P〗
b)
Substituting, t = log⁡〖S/P〗/(m log⁡〖(1+i)〗 )

Solution 2: solving for the unknown term using a t = log⁡〖6,000/4,800〗/(2 log⁡〖

calculator
(1.04)〗 )
4,800(1+i)n = 6,000

(1.04)n = 6,000/4,800
 Determine the unknown term (n) in each of the
following:
.PART VIII
P S j m 12. In how many months will P6,000 accumulate to
P9,000 if money is invested at 12% compounded
1. P400 P600 12% 2 quarterly?
2. P4,600 P7,000 10% 4 13. When will P8,0000 accumulate to P10,000 if money
3. P5,800 P10,000 14% 4 is invested at 10% compounded quarterly?

4. P620 P960 8% 2 14. How long will it take P24,000 to yield interest of
P30,000 if money is invested at 18% compounded
5. P1,800 P2,600 6% 1 monthly.

B. Solve the ff. problems: 15. Mr. Santos deposited P50,000 in a bank on June 15,
2008 that gives 18% compounded monthly. If he wants to
6. How long will it take for money to double itself at 10%
withdraw the money once it earns interest of P30,000,
m = 4?
when Mr. Santos withdraw the money?\
7. If P59,800 is invested at 12% m = 2, after how many
months will it accumulate to P71,320?

8. How long will it take P81,700 to earn half the amount if

invested at 12% monthly?

9. How long will it take P400,000 to settle a loan of

P280,000 if interest is computed at 10% m = 4?

10. how long will it take for P95,000 to accumulate to

P164,000 at 9% computed semi-annually?

11. How long will it take P87,684 to earn interest of

P40,000 if invested at 8% compound semi-annually?