. A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made at 8% simple interest for 4 years. However, due to the pandemic the business operation is not stable, thus, the merchant was not able to pay the debt including its interest. The lender decided to extend the loan period for 6 years but, the merchant must pay equal payments at a new interest rate of 10% compounded semi-annually. How much is the equal payment at the end of 10 years? 2. A parent wishes to develop an educational fund for a new born child's college education. The fund is to pay an equal withdrawal on the eighteenth, nineteenth and twentieth and twenty-first birthdays of the child. The fund will be built up by depositing P1,000.00 quarterly until the 17th birthday of the Child. Find the amount of money that the child can withdraw after the last deposit is made. 3. The average price of gasoline was given P77.50 per liter. We computed the average annual rate of increase in the price of gasoline to be 8.90%. If we assume that the price of gasoline will continue to inflate at this rate, how long will it be before we are paying P100.00 per liter?
SHOW YOUR COMPLETE SOLUTION
1. A merchant loaned P20,000.00 to a friend to start a business, the loan was originally made
at 8% simple interest for 4 years. However, due to the pandemic the business operation is
not stable, thus, the merchant was not able to pay the debt including its interest. The lender
decided to extend the loan period for 6 years but, the merchant must pay equal payments
at a new interest rate of 10% compounded semi-annually. How much is the equal payment
at the end of 10 years?
2. A parent wishes to develop an educational fund for a new born child's college education.
The fund is to pay an equal withdrawal on the eighteenth, nineteenth and twentieth and
twenty-first birthdays of the child. The fund will be built up by depositing P1,000.00
quarterly until the 17th birthday of the Child. Find the amount of money that the child can
withdraw after the last deposit is made.
3. The average price of gasoline was given P77.50 per liter. We computed the average annual
rate of increase in the price of gasoline to be 8.90%. If we assume that the price of gasoline
will continue to inflate at this rate, how long will it be before we are paying P100.00 per
liter?
Step by step
Solved in 3 steps
