Engineering Economics
Engr. Trinidad loans from a loan firm an amount of P100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowed. If at the end of one year, she has to pay the full amount of P100,000, what is the actual rate of interest?

24.7 %
23.5 %
25.0 %
25.8 %

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Engineering Economics
It is the practice of almost all banks in the Philippines that when they grant a loan, the interest for one year is automatically deducted from the principal amount upon release of money to a borrower. Let us therefore assume that you applied for a loan with a bank and the P80,000 was approved at an interest rate of 14% of which P11,200 was deducted and you were given a check of P68,800. Since you have to pay the amount of P80,000 one year after, what then will be the effective interest rate?

0.1647
0.1628
0.1632
0.1602

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Engineering Economics
In a cash-flow diagram:

All of these
Time 0 is considered to be the present
A vertical arrow pointing up indicates a positive cash flow
Time 1 is considered to be the end of time period 1

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