1. How many years will a deposit triple itself at an interest rate of 7% per annumcompounded continuously?2. A nominal annual rate of interest of 7%, compounded continuously, has an effectiveannual interest rate of_.3. At what interest rate, compounded quarterly, will an investment double in 5 years?4. A house and lot costing P2 Million was bought at a downpayment of P500,000 and P1Million after one year. The remaining balance will be paid annually, what is the requiredpayment?5. Mr. Fernandez borrowed P25,000 due in 1 year and P75,000 due in 4 years. He agrees topay P50,000 in 3year and the balance in 2 years. How much must he pay at the end of twoyears if money is worth 5% compounded continuously?6. What is the nominal rate of interest compounded continuously for 8 years if the presentworth factor is equal to 0.6187835.7. If P 8000 is borrowed for 105 days at 12% per annum. How much will be due at the endof 105 days?8. A man buys an electric fan from a merchant that charges P1500.00 at the end of 90 days.The man wishes to pay cash. What is the cash price if money is worth 10% simple interest?9. Compute the equivalent rate of 6% compounded semi-annually to a rate compoundedquarterly.10. If money is invested at a nominal rate of interest of 8% for a period of 4yrs. (a) What isthe effective rate if it is compounded ocontinuously. (b) What is the value of the compoundamount factor if it is compounded continuously.

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1. How many years will a deposit triple itself at an interest rate of 7% per annum compounded continuously?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. How many years will a deposit triple itself at an interest rate of 7% per annum
compounded continuously?
2. A nominal annual rate of interest of 7%, compounded continuously, has an effective
annual interest rate of_.
3. At what interest rate, compounded quarterly, will an investment double in 5 years?
4. A house and lot costing P2 Million was bought at a downpayment of P500,000 and P1
Million after one year. The remaining balance will be paid annually, what is the required
payment?
5. Mr. Fernandez borrowed P25,000 due in 1 year and P75,000 due in 4 years. He agrees to
pay P50,000 in 3year and the balance in 2 years. How much must he pay at the end of two
years if money is worth 5% compounded continuously?
6. What is the nominal rate of interest compounded continuously for 8 years if the present
worth factor is equal to 0.6187835.
7. If P 8000 is borrowed for 105 days at 12% per annum. How much will be due at the end
of 105 days?
8. A man buys an electric fan from a merchant that charges P1500.00 at the end of 90 days.
The man wishes to pay cash. What is the cash price if money is worth 10% simple interest?
9. Compute the equivalent rate of 6% compounded semi-annually to a rate compounded
quarterly.
10. If money is invested at a nominal rate of interest of 8% for a period of 4yrs. (a) What is
the effective rate if it is compounded ocontinuously. (b) What is the value of the compound
amount factor if it is compounded continuously.

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