1) FGH is investing P10,000 on January 1, 2014, earning a 30% 6) Mr.

Chan segregated P150,000 cash on January 1, 2013 intended

return every year. You are to find the value of this investment on for expansion after 8 years to protect the fund from devaluing. He
December 31, 2019. deposited it to a special savings account paying annual compound
a) What future value factor rounded to 5 decimal digits interest of 13% for the first 5 years and reinvest it in a regular
should be used? savings account that pays 10% compounded quarterly for the next 3
years. How much would be in the find after 8 years?

b) What is the value of the investment on December 31, 2019?

2) CDE is investing P10,000 every January 1st starting January 1,

2014 earning 25% return every year. 7) The IDM company has developed a new line of desktop
a) Future value factor computers. It is estimated that the cash returns generated by the new
product line will be P800,000 per year for the next 5 years and then
P500,000 for the next 3 years. The cash returns occur at the end of
each year. At a 9% interest rate, what is the present value of this
cash return?
b) Value of the investment on Dec, 31, 2019

3) FGH is expected to receive P1,000,000 on Dec. 31, 2016 as

settlement of an insurance claim. Money is earning a 5% return
every year. 8) Mr. Castaneda wants to buy a new sports car in 3 years. The car
a) Present value factor is expected to cost P80,000 at that time. If Mr. Castaneda would be
so lucky to find an investment yielding 12% over the 3 year period,
how much would he have to invest to accumulate P80,000 at the
end of the next 3 years?

b) Value of the claim on January 1, 2014

9) Ms. Joy Casem is planning for her golden years. She will retire in
4) Mr. Alan Silva wants to prepare for his wedding to take place 20 years. At which time, she plans to begin withdrawing 60,000
after 5 years. He estimates that he will need around P200,000 for his annually. She is expected to live for 20 years following her
wedding. If money is worth 12% per annum, how much should he retirement. Her financial advisor thinks that she can earn 9%
invest today to achieve his target amount? annually. How much does she need to invest each year to prepare
for her financial needs after her retirement?

5) Glory Barry has P25,000 idle cash that will be used only after 5
years. Glory plans to invest It while it is not being used. BPI offers
special time deposit account where it will earn a simple interest of
15% compounded annually. Glory can withdraw both the principal
and interest after 5 years. How much money will Glory withdraw at
maturity?
10) You pay P1,000 in a deposit account that pays 20% interest 16) You have P42,180.53 in a brokerage account and you plan to
compounded quarterly planning to use it to finish your last year in deposit an additional P5,000 at the end of every future year until
college. 18 months later, you decided to go to mt. Apo to become a your account totals P250,000. You expect to earn 12% annually on
mountain hiker instructor rather than continuing school so you close your account. How many years will it take you to reach your goal?
your account. How much money will you receive?

17) What is the future value of a 7% 5-year ordinary annuity that

pays P300 each year? If this was an annuity due, what would its
future value be?
11) Today is your 20th birthday, your aunt just gave you P1,000.
You have used the money to open an account. Your plan is to
contribute an additional P2,000 to the account each year on your
birthday up through and including your 62nd birthday starting next
year. The account has an annual expected return of 12%, how much
do you expect to have in the account after you make the final
P2,000 contribution on your 62nd birthday?

18) An investment will pay P100 at the end of each of the next 3
years, P200 at the end of Year 4, P300 at the end of Year 5 and
P500 at the end of Year 6. If other investments of equal risk earn
8% annually, what is its present value? Its future value?

19) Find the following values:

a) An initial P500 compounded for 1 year at 6%

12) If you deposit P10,000 in a bank account that pays 10% interest
annually, how much will be in your account after 5 years? b) An initial P500 compounded for 2 years at 6%

c) The present value of P500 due in 1 year at a discount rate of

6%
13) What is the present value of a security that will pay P5,000 in
20 years if securities of equal risk pay 7% annually?
d) The present value of P500 due in 2 years at a discount rate
of 6%

14) Your parents will retire in 18 years. They currently have e) An initial P500 compounded for 10 years at 6%
P250,000 and they think they will need P1,000,000 at retirement.
What annual interest rate must they earn to reach their goal
assuming they don’t save any additional funds? f) An initial P500 compounded for 10 years at 12%

g) The present value of P500 due in 10 years at 6%

15) If you deposit money today in an account that pays 6.5% annual
interest, how long will it take you to double your money?
h) The present value of P1,552.90 due in 10 years at 12% and
at 6%
 a) If she follows your advice, how much money will she have at
20) Find the future values of these ordinary annuities compounding 65?
once a year
a) P400 per year for 10 years at 10%

b) P200 per year for 5 years at 5%

b) How much will she have at 70?

c) P400 per year for 5 years at 0%

d) Rework a and b, assuming they are annuities due

c) She expects to live for 20 years if she retires at 65 and for 15

years if she retires at 70. If her investments continue to earn the
same rate, how much will she be able to withdraw at the end of
each year after retirement at each retirement age?

21) Find the present value of these ordinary annuities discounting

once a year
a) P400 per year for 10 year at 10%

b) P200 per year for 5 years at 5%

c) P400 per year for 5 years at 0%

22) Find the present value of the following time lines at 8% 24) Crissie just won the lottery and she must choose between
compounded annually three award options. She can elect to receive a lump sum today
0 1 2 3 4 5 of P61 million to receive 10 end-of-year patments of P9.5
million, or to receive 30 end-of-year payments of P5.5 million.
P0 P100 P400 P400 P400 P300 a) If she thinks she can earn 7% annually, which should
she choose?

b) If she expects to earn 8% annually, which option would

0 1 2 3 4 5 you recommend?

P0 P300 P400 P400 P400 P100

c) If she earns 9% annually, which option would you

recommend?

23) Your client is 40 year old and she want to begin saving for
retirement, with the first payment to come one year from now. She
can save P5,000 per year. You advise her to invest in the stock
market, which you expect to provide an average return of 9% in the
future
25) Find the amount to which P500 will grow under each of these
conditions
a) 12% compounded annually for 5 years

b) 12% compounded semiannually for 5 years

c) 12% compounded quarterly for 5 years

d) 12% compounded monthly for 5 years

e) 12% compounded daily for 5 years

26) Assuming a rate of 10% annually, find the FV of P1,000 after 5

years.

27) What is the investment’s FV at rates of 0%, 5% and 20% after

0,1,2,3,4 and 5 years?

28) What is the rate of return of a security that costs P1,000 and
returns P2,000 after 5 years?

29) Find the PV of an ordinary annuity that pays P1,000 each of the
next 5 years if the interest rate is 15%. What is the annuity’s FV?