Simulated Exam - Questions - General Mathematics

GENERAL MATHEMATICS
Simulated Exam
SIMPLE AND COMPOUND INTEREST
(15 items, 15 points, 30 minutes)
Terminologies (6 points) |TRUE OR FALSE - Choose the correct answer based on the statements given below:
A Only statement 1 is true
C Both statements 1 and 2 are true
B Only statement 2 is true
D Both statements 1 and 2 are not true
STATEMENT 1
STATEMENT 2
Maturity value is the amount the lender receives from the

borrower on repayment date.
For the debtor, interest is the amount of money earned for

the use of money.
A lender can sometimes be called a creditor.
A lender can either be a person or an institution.
The percent increase of the investment is called the

principal.
The length of time between the origin and the maturity

date is called the term.
It is generally assumed that in simple interest, rates are

expressed semi-annually (half-yearly).
In computing simple interest, when the term is expressed

in months (M), t should be converted to years by t = M/12.
Interest is the payment for the use of borrowed money.
The maturity date should be after the origin date.
The rate of interest for each conversion period is

computed by the frequency of conversion over the annual
rate of interest.
If the interest is compounded quarterly, the frequency of

conversion is equal to 3.
Problem Solving (9 points) |Show complete solutions on the given problem sets, round off final answer to four
decimal places:
1. Three months after borrowing money, David Tan pays an interest of Php 270.00. How much did he
borrow if the interest rate is at 5 %?
2. A businessman charges his client with Php 2,750 on a loan of Php 15,800 for 2 years and 3 months. What
interest rate is he using?
3. Find the compound amount and interest if Php 4,600 is invested at 8% compounded quarterly for 5 years
and 6 months.
4. A savings account in a bank yields 0.25% compound interest annually. Accumulate Php 25,000 for 4
years in this savings account. How much interest will be gained?
5. If the interest is compounded quarterly, find the nominal rate if the effective rate is 10%.
6. When interest is compounded monthly, find the effective rate corresponding to the nominal rate of 3 ?
7. On the 7th birthday of her daughter, Shirlee deposited an amount in a bank peso bond fund that pays
1.0% interest compounded annually. How much should she deposit if she wants to have Php 100,000 on
her daughter's 18th birthday?
8. Danury Marquez owns a note for Php 5,600 due in 3 years and 9 months. How much should a buyer pay
now for the note with an interest of 5 %, every three months?
9. If a person borrowed Php 88,888 at an annual simple interest rate of 10 % for 18 months, how much
interest should he pay if it. Note: The bank usually compounds semi-annually.
ANNUITIES
(15 items, 15 points, 30 minutes)
Terminologies (5 points) | Supply the correct words in the blanks below.
1. An ordinary annuity is a type of annuity in which the payments are made at the __________ of each
payment interval.
2. Annuity certain : definite term :: __________________ : indeterminate length of time
3. True or false: The cash value (cash price) is equal to the down payment (if any) plus the present value of
all installment payments.
4.
A __________ annuity is an annuity that doesn't begin until a given time interval has passed.
5. In computing for general annuities, the extra step occurs in finding j, where the interest rate given must
be converted to a/an ____________________ rate per payment interval.
Problem Solving (10 points) |Show complete solutions on the given problem sets, round off final answer to four
decimal places:
1. A stereo is offered for sale for Php 5,000 down payment and Php 240 every three months for the balance
for 2 years and 9 months. If the interest is to be computed at 5% converted quarterly, what is the cash
price equivalent of the stereo set?
2. A man deposits Php 650 every end of 6 months in an account paying 5 % interest compounded semiannually. What amount is in the account at the end of 5 years and 6 months?
3. How much monthly deposit must be made for 8 years and 6 months in order to accumulate Php 12,500 at
7% compounded monthly?
4. Mr. Manuel Avila wants to buy a car worth Php 155,000. He can pay Php 85,000 down payment and the
balance payable every end of the month for 5 years. Find how much must he pay monthly at 3 %
compounded monthly?
5. A sala set can be purchased for Php 6,700 down payment and Php 250 every end of each month for 2
years of a rate of 4% compounded semi-annually. Find the cash equivalent of the sala set.
6. What periodic payment at the end of each year for 10 years will be needed to accumulate Php 40,800
with interest rate at 5% compounded quarterly?
7. Ann Loraine wants to accumulate Php 15,000 in 7 years. Equal deposits are made at the end of each
three months in a savings account that pays 7% compounded monthly. What is the size of each deposit?
8. In a series of quarterly payments of Php 570 each, the first payment is due at the end of 5 years and the
last at the end of 10 years and 9 months. If money is worth 6% compounded quarterly, find the present
value of the deferred annuity. (Bonus point: what is the original term?)
9. Find the present value of a series of monthly payments of Php 95.00 each, the first payment is due at the
end of 2 years and 4 months, and the last at the end of 5 years and 7 months, if money is worth 3%
compounded monthly.
10. Mr. and Mrs. Mercado decided to sell their house and to deposit the fund in the bank. After computing
the interest, they found out that they may withdraw Php 350,000.00 yearly for 4 years starting at the
end of the 7 years when their child will be in college. How much is the fund deposited if the interest rate
is 3% compounded annually?
BONUS POINT: Find the quarterly payments for 21 quarters to discharge an obligation of Php 12,000, if money is
worth 4 % compounded quarterly and the first payment is due at the end of the 3 years and 9 months.

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GENERAL MATHEMATICS

Maturity value is the amount the lender receives from the

For the debtor, interest is the amount of money earned for

A lender can sometimes be called a creditor.

A lender can either be a person or an institution.

The percent increase of the investment is called the

The length of time between the origin and the maturity

It is generally assumed that in simple interest, rates are

In computing simple interest, when the term is expressed

Interest is the payment for the use of borrowed money.

The maturity date should be after the origin date.

The rate of interest for each conversion period is

If the interest is compounded quarterly, the frequency of

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