# MCQs in Engineering Economics Part XII

Compiled MCQs in Engineering Economics Part 12 of the series as one topic in General Engineering and Applied Sciences (GEAS) in the ECE Board Exam.

This is the Multiples Choice Questions Part 12 of the Series in Engineering Economics as one of the General Engineering and Applied Sciences (GEAS) topic. In Preparation for the ECE Board Exam make sure to expose yourself and familiarize in each and every questions compiled here taken from various sources including past Board Questions in General Engineering and Applied Sciences (GEAS), Engineering Economy Books, Journals and other Engineering Economy References.

### Online Questions and Answers in Engineering Economics Series

Following is the list of multiple choice questions in this brand new series:

Engineering Economics MCQs
PART 1: MCQs from Number 1 – 50                        Answer key: PART I
PART 2: MCQs from Number 51 – 100                   Answer key: PART II
PART 3: MCQs from Number 101 – 150                 Answer key: PART III
PART 4: MCQs from Number 151 – 200                 Answer key: PART IV
PART 5: MCQs from Number 201 – 250                 Answer key: PART V
PART 6: MCQs from Number 251 – 300                 Answer key: PART VI
PART 7: MCQs from Number 301 – 350                 Answer key: PART VII
PART 8: MCQs from Number 351 – 400                 Answer key: PART VIII
PART 9: MCQs from Number 401 – 450                 Answer key: PART IX
PART 12: MCQs from Number 551 – 600                 Answer key: PART XII

### Continue Practice Exam Test Questions Part XII of the Series

Choose the letter of the best answer in each questions.

551. What is the effective rate corresponding to 16% compounding daily? Take 1 year = 360 days.

• A. 17.35%
• B. 17.45%
• C. 17.55%
• D. 17.65%

552. By the condition of a will, the sum of P25,000 is left to a girl to be held in a trust fund by her guardian until it amounts to P45,000. When will the girl receive the money if the fund is invested at 8% compounded quarterly?

• A. 7.42 years
• B. 7.67 years
• C. 7.85 years
• D. 7.98 years

553. P200,000 was deposited at an interest rate of 24% compounded semi-annually. After how many years will the sum be P621,170?

• A. 4 years
• B. 5 years
• C. 6 years
• D. 7 years

554. In year zero, you invest P10,000.00 in a 15% security for 5 years. During that time, the average annual inflation is 6%. How much, in terms of year zero pesos will be in the account at maturity?

• A. P15,030.03
• B. P20,113.57
• C. P18,289.05
• D. P16,892.34

555. A company invests P10,000 today to be repaid in 5 years in one lump sum at 12% compounded annually. How much profit in present day pesos is realized?

• A. P7,563.29
• B. P7,498.20
• C. P7,340.12
• D. P7,623.42

556. How long (in nearest years) will it take money to quadruple if it earns 7% compounded semi-annually?

• A. 20 years
• B. 18 years
• C. 21 years
• D. 19 years

557. How much should you put into a 10% savings account in order to have P10,000.00 in five years?

• A. P6,216.21
• B. P6,212.12
• C. P6,218.21
• D. P6,209.21

558. A man expects to receive P20,000 in 10 years. How much is that money worth now considering interest at 6% compounded quarterly?

• A. P11,042.89
• B. P11,035.12
• C. P11,025.25
• D. P11,012.52

559. P500,000 was deposited 20.15 years ago at an interest rate of 7% compounded semi-annually. How much is the sum now?

• A. P2,000,033.33
• B. P2,000,166.28
• C. P2,001,450.23
• D. P2,002,820.12

560. A bank pays one percent interest on savings accounts four times a year. What is the effective annual interest rate?

• A. 4.06%
• B. 4.12%
• C. 4.16%
• D. 4.28%

561. Alexander Michael owes P25,000.00 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000.00 today and the balance in 2 years. How much must he pay at the end of two years if money is worth 5% compounded semi-annually?

• A. P39,015.23
• B. P39,026.25
• C. P39,056.21
• D. P39,089/78

562. Find the difference between simple interest and compound interest on a savings deposit of P50,000 at 10% per annum for 3 years.

• A. P1,510
• B. P1,530
• C. P1,550
• D. P1,570

563. If money is worth 5% compounded quarterly, find the equated time for paying a loan of P150,000 due in 1 year and P280,000 due in 2 years.

• A. 1.52 years
• B. 1.64 years
• C. 1.69 years
• D. 1.72 years

564. For a loan acquired six years ago, a man paid out the amount of P75,000.00. The interest was computed at 18% compounded annually. How much was the borrowed amount?

• A. P27,367.28
• B. P27,278.36
• C. P27,782.36
• D. P27,872.63

565. A couple decided that for every child that will be born to them they will place a deposit in the bank so that on the child’s 18th birthday, the child will receive the amount of P300,000.00. If the bank will pay an interest of 18% compounded yearly, how much deposit will the couple have to make on the birth of a child to them?

• A. P15,367.18
• B. P15,249.13
• C. P15,722.16
• D. P15,482.64

566. On his 6th birthday a boy is left an inheritance. The inheritance will be paid in a lump sum of P10,000 on his 21st birthday. What is the present value of the inheritance as of the boy’s 6th birthday, if the interest is compounded annually? Assume i = 4%.

• A. P5,552.64
• B. P5,549.10
• C. P5,522.12
• D. P5,582.63

567. A man who won P300,000 in a lottery decided to place 50% of his winning in a trust fund for the college education of his son. If the money will earn 14% per year compounded quarterly, how much will the man have at the end of 10 years when his son will be starting his college education?

• A. P593,120.12
• B. P593,452.12
• C. P592,739.96
• D. P593,888.96

568. If the sum of P15,000 is deposited in an account earning 4% per annum compounded quarterly, what will be the deposited amount at the end of 5 years?

• A. P18,302.85
• B. P18,450.89
• C. P18,512.83
• D. P18,638.29

569. The Philippine Society of Mechanical Engineers is planning to put up its own building. Two proposals being considered are:

a. The construction of the building now to cost P400,000.

b. The construction of a smaller building now to cost P300,000 and at the end of 5 years, an extension to be added to cost P200,000.

By how much is proposal B more economical than proposal A if interest rate is 20% and depreciation is to be neglected?

• A. P19,122.15
• B. P19,423.69
• C. P19,518.03
• D. P19,624.49

570. A credit plan charges interest rate of 36% compounded monthly. Find its effective rate.

• A. 42.21%
• B. 42.30%
• C. 42.41%
• D. 42.57%

571. A master card compounds monthly and charges an interest of 1.5% per month. What is the effective interest rate per year?

• A. 19.23%
• B. 19.45%
• C. 19.56%
• D. 19.65%

572. A man expects to receive P20,000 in 10 years. If interest is computed at 6% compounded quarterly, how much is it worth today?

• A. P11,025.25
• B. P11,035.25
• C. P11,045.25
• D. P11,055.25

573. Microsoft CEO, billionaire Bill Gates willed that a sum of \$25 million be given to a child but will be held in trust by the child’s mother until it amounts to \$45 million. If the amount is invested and earns 8% compounded quarterly, when will the child receive the money?

• A. 8.11 years
• B. 7.90 years
• C. 7.42 years
• D. 7.24 years

574. Find the present value of installment payments of P1,000 now, P2,000 at the end of the first year, P3,000 at the end of the second year, P4,000 at the end of the third year and P5,000 at the end of the fourth year, if money is worth 10% compounded annually.

• A. P11,411.10
• B. P11,530.98
• C. P11,621.67
• D. P11,717.85

575. How long will it take money to triple itself if invested at 8% compounded annually?

• A. 14.27 years
• B. 14.56 years
• C. 14.78 years
• D. 14.98 years

576. Two hundred years ago, your great, great, great grandfather deposited P1 in a savings account. Today, the bank notified you that you are the sole heir to this account. How much is the account today if it earns 8% per annum?

• A. P4,002,450.78
• B. P4,102,405.90
• C. P4,838,949.58
• D. P4,909,289.45

577. What is the present worth of a future payment of P200,000 to be made in 10 years with an interest of 10% compounded annually?

• A. P76,901.21
• B. P77,108.66
• C. P78,109.32
• D. P79,667.32

578. A deposit of P1,000.00 is made in a bank account that pays 8% interest compounded annually. How much money will be in the account after 10 years?

• A. P2,374.21
• B. P2,158.92
• C. P2,734.12
• D. P2,400.12

579. What nominal rate compounded annually would quadruple the principal in 4 years?

• A. 41.42%
• B. 40.81%
• C. 41.79%
• D. 40.45%

580. Five years ago, you paid P34,000 for a residential lot. Today you sell it at P50,000. What is your annual rate of appreciation?

• A. 8.12%
• B. 8.00%
• C. 7.92%
• D. 8.32%

581. Suppose that P100,000 is invested at a certain rate of interest compounded annually for 2 years. If the accumulated interest at the end of 2 years is P21,000. Find the rate of interest.

• A. 10.12%
• B. 10.00%
• C. 10.92%
• D. 10.32%

582. An investment of P20,000 will be required at the end of the year. The project would terminate at the end of the 5th year and the assets are estimated to have a salvage value of P25,000 at that time. What is the rate of interest for this project to break even?

• A. 5.74%
• B. 5.43%
• C. 5.91%
• D. 5.67%

583. Robin Padilla possesses a promissory note, due in 2 years hence, whose maturity value is P3,200. What is the discount value of this note, based on an interest rate of 7%?

• A. P2,795.00
• B. P2,975.00
• C. P2,579.00
• D. P2,759.00

584. JM borrowed a certain amount on June 1990 from DJ. Two years later, JM borrowed again from DJ an amount of P5,000. JM paid P1,000 on June 1993 and discharged his balance by paying P7,500 on June 1995. What was the amount borrowed by JM on June 1990 if the interest is 8% compounded annually?

• A. P1,511.61
• B. P1,611.51
• C. P1,711.41
• D. P1,811.31

585. Dr. Gary Sy invests P50,000 in a time deposit that yields 10% for his retirement 30 years from now. If the inflation rate is 5%, what will be the value of the account at maturity in terms of today’s peso.

• A. P201,689.91
• B. P201,571.91
• C. P201,345.91
• D. P201,869.91

586. First Benchmark Publisher Inc. invests P100,000 today to be repaid in five years in one lump sum at 12% compounded annually. If the rate of inflation is 4% compounded annually, how much profit, in today’s pesos, is realized over the five-year period?

• A. P44,512.89
• B. P44,672.10
• C. P44,851.64
• D. P44,901.23

587. A manufacturing firm contemplates retiring an existing machine at the end of 2002. The new machine to replace the existing one will have an estimated cost of P400,000. This expense will be partially defrayed by the sale of the old machine as scrap for P30,000. To accumulate the balance of the required capital, the firm will deposit the following sum in an account earning interest at 5% compounded quarterly:

P60,000 at the end of 1999

P60,000 at the end of 2000

P80,000 at the end of 2001

What cash disbursement will be necessary at the end of 2002 to purchase the new machine?

• A. P155,890.12
• B. P153,085.56
• C. P154,200.12
• D. P156,930.38

588. On June 1, 1998, Ms. Brenda Marcial purchased stock of San Miguel Corporation at a total cost of P144,000. She then received the following semiannual dividends:

P4,200 on December 1, 1998

P4,400 on June 1, 1999

P4,400 on December 1, 1999

P4,000 on June 1, 2000

After receiving the last dividend, Ms. Marcial sold her stock, receiving P152,000 after deduction of brokerage fees. What semiannual rate did this dividend realize on her investment?

• A. 4.26%
• B. 4.54%
• C. 4.87%
• D. 4.91%

589. Engr. Narito has P13,760 in cash and he would like to invest it in business. His estimates of the year-by-year receipts and disbursements for all purposes are shown in the tabulation below:

 Year Receipts Disbursements 0 0 - P13,760 4 P5,000 + P1,000 5 P6,200 + P1,200 6 P7,500 + P1,500 7 P8,800 + P1,800

He estimates that his equipment will have a salvage value of P2,000 at the end of useful life. Find the rate of return of the prospective equipment.

• A. 10.11%
• B. 11.80%
• C. 11.10%
• D. 10.51%

590. What interest rate, compounded monthly, is equivalent to a 10% effective rate?

• A. 9.45%
• B. 9.26%
• C. 9.65%
• D. 9.56%

591. Froyd Wess Network Inc. plans to purchase a piece of land and to build a school building on this land. However, since the school building is not an immediate requirement, the institute is considering whether it should purchase this land and build the building now or defer this action for 3 years. The current costs are as follows:

Land: P800,000 Building: P12,000,000

The purchase price of the land and the cost of the school building are expected to appreciate at the rate of 15% and 4% per annum, respectively. What will be the total cost of the land and structure 3 years hence?

• A. P14,520,120
• B. P14,715,068
• C. P14,902,189
• D. P15,021,781

592.) Mr. Jimenez owes Mr. Padua the following amounts:

P40,000 due 2 years hence

P60,000 due 3 years hence

P72,000 due 4 years hence

Having won the lottery, Mr. Jimenez decided to liquidate the debts at the present time. If the two parties agree on a 5% interest rate, what sum must Mr. Jimenez pay?

• A. P147,520.20
• B. P147,346.02
• C. P147,902.89
• D. P147,021.81

593. Mr. John Bongat working in the United States planned of returning to the Philippines at the end of 2001. He established a fund starting in 1995 with the following recorded deposits and withdrawals.

January 1, 1995 Deposit of P40,000

January 1, 1997 Deposit of P80,000

July 1, 1997 Withdrawal of P12,000

July 1, 1998 Deposit of P64,000

January 1, 1999 Withdrawal of P48,000

His fund earned interest at the rate of 3.5% compounded semiannually until the end of 1997. At that date, the interest was augmented to 4% compounded semiannually. What will be the principal in the fund at the end of 2001?

• A. P146,323.08
• B. P146,992.99
• C. P146,846.92
• D. P146,022.82

594. JRT Publishers is contemplating of installing a labor-saving printing equipment. It has a choice between two different models. Model A will cost P1,460,000 while model B will cost P1,452,000. The anticipated repair costs for each model are as follows:

Model A: P60,000 at the end of 5th year

P80,000 at the end of 10th year

Model B: P152,000 at the end of 9th year

The two models are alike in all other respects. If the publisher is earning a 7% return of its capital, which model should be purchased? How much savings will be accrued if the publisher will purchase the more economical model?

• A. P8,769.18
• B. P8,918.23
• C. P9,012.53
• D. P9,341.11

595. What is the future amount of P50,000 if the single payment compound amount factor of this investment is 1.23%

• A. P61,700
• B. P61,900
• C. P61,200
• D. P61,500

596. An investment indicates a single compound amount factor of 1.32 if invested for “n” years. If the interest rate is 4.73% per annum, find the value of “n.”

• A. 4
• B. 5
• C. 6
• D. 7

597. Mr. Mondragon invests P50,000 today. Several years later, it becomes P60,000. What is the single payment present worth factor of this investment? If the amount was invested for 5 years, what is the rate of interest?

• A. 3.1%
• B. 3.3%
• C. 3.5%
• D. 3.7%

598. Money is deposited in a certain account for which the interest is compounded continuously. If the balance doubles in 6 years, what is the annual percentage rate?

• A. 11.55%
• B. 11.66%
• C. 11.77%
• D. 11.88%

599.) On January 1, 1999, Ms. Angel Locsin opened an account at Bank of Philippine Islands with an initial deposit of P1,000,000.00. On March 1, 2000, she opened an additional P1,000,000.00. If the bank pays 12% interest compounded monthly, how much will be in the account on April 1, 2000?

• A. P2,180,968.95
• B. P2,190,968.95
• C. P2,160,968.95
• D. P2,170,968.95

600. The paper currency issued by the Central Bank which forms part of the country’s money supply.

• A. T-bills
• B. Bank note
• C. Check
• D. Coupon

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