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Worksheets

ECON

Total questions: 15

Worksheet time: 6mins

Name
Class
Date
1.

Which of the following best defines time value of money?

a)

A. Money loses value only in inflation

b)

B. Money has constant value over time

c)

C. Money now is worth more than the same amount in the future

d)

D. Money in the future gains same purchasing power

2.

When the present worth equals the future worth, the interest rate is called:

a)

A. Nominal rate

b)

B. Effective rate

c)

C. Break-even interest rate

d)

D. Simple interest rate

3.

If ₱50,000 is deposited for 5 years at 8% compounded annually, it grows to:

a)

A. ₱70,000

b)

B. ₱73,466

c)

C. ₱74,500

d)

D. ₱68,240

4.

The discount rate that makes the net present worth equal zero.

a)

A. Net Return

b)

B. Rate of Return

c)

C. Capital Cost

d)

D. Benefit Ratio

5.

If compounding is more frequent than once a year, the effective interest rate is:

a)

A. Equal to nominal rate

b)

B. Higher than nominal rate

c)

C. Lower than nominal rate

d)

D. Unaffected

6.

The cost that cannot be recovered once incurred.

a)

A. Operating cost

b)

B. Incremental cost

c)

C. Sunk Cost

d)

D. Opportunity cost

7.

The nominal rate of 12% compounded quarterly is equivalent to an effective annual rate (EAR) of approximately:

a)

A. 12.55%

b)

B. 12.00%

c)

C. 13.00%

d)

D. 11.85%

8.

If the salvage value of an equipment is ₱50,000, original cost ₱250,000, and life is 5 years, the annual depreciation by straight-line method is:

a)

A. ₱50,000

b)

B. ₱60,000

c)

C. ₱40,000

d)

D. ₱55,000

9.

Which of the following depreciation methods cannot have a salvage value of zero?

a)

A) Straight line Method

b)

B) Sinking Fund Method

c)

C) Declining Balance

d)

D) Sum of the Year Digit Method

10.

When will an amount be tripled in years with an interest of 11.56%?

a)

9

b)

10

c)

11

d)

12

11.

A man planned to build a house. The cost of construction is P500,000 while annual maintenance cost is estimated at P10,000. If the interest rate is 6%, what is the capitalized cost of the house?

a)

P666,000.00

b)

P,666,666.67

c)

P633,333.33

d)

P650,000.00

12.

The original cost of a certain piece of equipment is P500,000. The value after its useful life of 5 years is P100,000. Using the declining balance method, find its value at the end of 3 years.

a)

P168,475

b)

P176,134

c)

P194,954.6

d)

P190,365.4

13.

An equipment was bought for P1,800,000 with a salvage value of P350,000 after its life of 8 years. The cost of money is 12% per year. Using the sinking fund method, find its book value after 5 years.

a)

P1,456,952.2

b)

P1,051,068.42

c)

P1,654,815.4

d)

P1,954,324.2

14.

A bank credits 10% nominal, compounded quarterly. Annual inflation is 4%. What is the effective real annual rate?

a)

4.56%

b)

5.65%

c)

6.14%

d)

7.89%

15.

An investment of P200,000 for 36 days earns P3,588.00 after deducting 20% withholding tax. Find the annual rate of simple interest.

a)

A.) 21.36%

b)

B.) 22.42%

c)

C.) 23.16%

d)

D.) 24.22%