Reference no: EM133035025

Problems:

1. A man borrows money from a bank which uses a simple discount rate of 14%. He signs a promissory note promising to pay P500.00 per month at the end of the 4th, 6th, and 7th months, respectively. Determine the amount he received from the bank.

2. Sana Oil buys a television set from a merchant who asks for P1,250 if paid at the end of 60 days. However, Sana Oil wishes to pay immediately and the merchant offers to compute the cash price now. What is the cash price today if money is worth 8% simple interest?

3. Find the nominal rate which if converted quarterly could be used instead of 12% compounded monthly. What is the corresponding effective rate of return?

4. A P2,000 loan was originally made at 8% simple interest for 4 years. At the end of this period the loan was extended for 3 years without the interest being paid, but the new interest rate was made 10% compounded semi-annually. How much should the borrower pay at the end of 7 years?

5. Compare the accumulated amount after 5 years of P1,000.00 invested at the rate 10% per year compounded, (a) annually, (b) semi-annually, (c) quarterly, (d) daily, and (f) continuously.