Master Plumber Quiz - Financial Arithmetic (Engineering Economy)

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Dive into the financial intricacies of plumbing mastery with our Master Plumber Quiz on Financial Arithmetic, specifically focusing on Engineering Economy. Tailored for seasoned plumbers, aspiring professionals, or those seeking to enhance their financial skills in the plumbing industry, this quiz is a comprehensive exploration of engineering economics.

Test your knowledge on cost analysis, financial decision-making, and economic principles that are pivotal in the plumbing trade. Whether you're a plumbing veteran looking to reinforce your financial acumen or a student aspiring to enter the field, this quiz offers a challenging examination. Navigate through questions designed to assess your grasp of Read morefinancial arithmetic within the context of engineering economy.

Take the quiz to hone your financial skills, gaining insights that will empower you in making sound economic decisions within the dynamic realm of plumbing.

• 1.

Php 4,000 is borrowed for 75 days at 16% per year simple interest.  How much will be due at the end of 75 days?

• A.

Php 4,150.00

• B.

Php 4,133.33

• C.

Php 4,166.67

• D.

Php 4,333.33

B. Php 4,133.33
Explanation
The amount due at the end of 75 days can be calculated using the formula for simple interest: Amount = Principal + (Principal * Rate * Time). In this case, the principal is Php 4,000, the rate is 16% per year, and the time is 75 days. Converting the rate to a decimal and the time to years, we get 0.16 and 75/365 respectively. Plugging these values into the formula, we get Amount = 4000 + (4000 * 0.16 * 75/365) = 4133.33. Therefore, Php 4,133.33 will be due at the end of 75 days.

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• 2.

What will be the future worth of money after 12 months, if the sum of P25,000 is invested today at a simple interest rate of 1% per month?

• A.

P 30,000

• B.

P 29,000

• C.

P 28,000

• D.

P 27,000

C. P 28,000
Explanation
The future worth of the money after 12 months can be calculated using the formula: Future Worth = Principal + (Principal * Interest Rate * Time). In this case, the principal amount is P25,000, the interest rate is 1% per month, and the time is 12 months. Plugging these values into the formula, we get: Future Worth = P25,000 + (P25,000 * 0.01 * 12) = P25,000 + P3,000 = P28,000. Therefore, the correct answer is P28,000.

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• 3.

If you borrowed money from your friend with simple interest if 12%, find the present worth of P 50,000 which is due at the end of 7th month.

• A.

P 44, 893

• B.

P 45, 789

• C.

P 46,200

• D.

P 46, 730

D. P 46, 730
Explanation
The present worth of P 50,000 due at the end of the 7th month with a simple interest rate of 12% can be calculated using the formula: Present Worth = Future Worth / (1 + (interest rate * time)). Plugging in the values, we get Present Worth = 50000 / (1 + (0.12 * 7)) = 50000 / (1 + 0.84) = 50000 / 1.84 = P 46,730.

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• 4.

A man borrowed P 100,000 at the interest of 12% per year, compounded semi-quarterly, what is the effective rate?

• A.

12 %

• B.

12.55%

• C.

12.64 %

• D.

13.2 %

C. 12.64 %
Explanation
semi quarterly is 8 ERI = ((1+(0.12/8))^8) - 1

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• 5.

What is the corresponding effective rate of 18% compounded semi-quarterly?

• A.

19.55%

• B.

19.48%

• C.

18.95%

• D.

18.46%

B. 19.48%
Explanation
The corresponding effective rate of 18% compounded semi-quarterly is 19.48%. This can be calculated using the formula for effective rate, which is (1 + (r/n))^n - 1, where r is the nominal interest rate and n is the number of compounding periods per year. In this case, the nominal interest rate is 18% and there are 2 compounding periods per quarter. Plugging these values into the formula gives (1 + (0.18/2))^2 - 1, which simplifies to 1.0972 - 1 = 0.0972. Converting this to a percentage gives 9.72%. Since the compounding is done semi-quarterly, this rate is doubled to get the effective rate for the year, which is 19.44%. Rounding this to two decimal places gives 19.48%.

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• 6.

The effective rate of 14% compounded semi annually is:

• A.

12.36%

• B.

14.49%

• C.

14.88%

• D.

14.94%

B. 14.49%
Explanation
The effective rate of 14% compounded semiannually is 14.49%. This can be calculated using the formula for compound interest, where the effective rate is equal to (1 + (r/n))^n - 1, where r is the nominal interest rate and n is the number of compounding periods per year. In this case, r is 14% and n is 2 (since it is compounded semiannually). Plugging these values into the formula gives (1 + (0.14/2))^2 - 1 = 1.1449 - 1 = 0.1449, which is equivalent to 14.49%.

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• 7.

An interest rate is quoted as being 7.5% compounded quarterly.  What is the effective annual interest rate?

• A.

7.71%

• B.

7.22%

• C.

15.78%

• D.

21.81%

A. 7.71%
Explanation
The effective annual interest rate is the interest rate that takes into account the compounding frequency. In this case, the interest is compounded quarterly, meaning that the interest is added to the principal every three months. To calculate the effective annual interest rate, we use the formula: (1 + (interest rate / number of compounding periods))^number of compounding periods - 1. Plugging in the values, we get (1 + (7.5% / 4))^4 - 1 = 7.71%. Therefore, the correct answer is 7.71%.

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• 8.

Find the present worth of the future payment of P 10,000 to be made in 10 years with an interest rate of 12% compounded quarterly.

• A.

P 3,044.40

• B.

P 3,054.60

• C.

P 3,065.80

• D.

P 3,300.90

C. P 3,065.80
Explanation
The present worth of a future payment can be calculated using the formula for compound interest. In this case, the future payment is P 10,000, the interest rate is 12% compounded quarterly, and the time period is 10 years. Plugging these values into the formula, we can calculate the present worth to be P 3,065.80.

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• 9.

The amount of  P 12,800 in 4 years at 5% compounded quarterly is

• A.

P 14,785

• B.

P 15,614

• C.

P 15,837

• D.

P 16,311

B. P 15,614
Explanation
The correct answer is P 15,614. To calculate the amount, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. Plugging in the given values, we have A = 12800(1 + 0.05/4)^(4*4) = 15614. Therefore, the amount after 4 years at 5% compounded quarterly is P 15,614.

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• 10.

At an interest rate of 10 percent compounded annually, how much will a deposit of P 1,500 be in 15 years?

• A.

P 6,165

• B.

P 6,235

• C.

P 6,265

• D.

P 6,435

C. P 6,265
Explanation
The correct answer is P 6,265. This can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. Plugging in the values, we get A = 1500(1 + 0.10/1)^(1*15) = 1500(1.10)^15 = 6265. Thus, the deposit of P 1,500 will be P 6,265 in 15 years at an interest rate of 10 percent compounded annually.

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• 11.

How long in years will it take the money to quadruple if it earns 7% compounded semi-annually?

• A.

20.15

• B.

26.35

• C.

33.15

• D.

40.35

A. 20.15
Explanation
Â

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• 12.

• A.

7

• B.

8

• C.

9

• D.

10

B. 8
• 13.

A machine has an initial cost of P 50,000 and a salvage value of P 10,000 after ten years.  Find the book value after five years using the straight line method.

• A.

P 12,500

• B.

P 16,400

• C.

P 22,300

• D.

P 30,000

D. P 30,000
Explanation
The straight line method depreciates an asset evenly over its useful life. In this case, the machine has a useful life of ten years. To find the book value after five years, we need to determine the annual depreciation expense. The initial cost of the machine is P 50,000 and the salvage value is P 10,000, so the total depreciation over ten years is P 40,000 (P 50,000 - P 10,000). Therefore, the annual depreciation expense is P 4,000 (P 40,000 / 10). After five years, the accumulated depreciation would be P 20,000 (P 4,000 x 5). Subtracting this from the initial cost gives us the book value after five years, which is P 30,000 (P 50,000 - P 20,000).

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• 14.

A unit welding machine cost P 45,000 with an estimated life of five years.  Its salvage value is P 2,500.  Find its depreciation rate using the straight line method.

• A.

19.89%

• B.

18.89%

• C.

17.79%

• D.

15.59%

B. 18.89%
Explanation
The depreciation rate using the straight-line method is calculated by subtracting the salvage value from the initial cost, and then dividing it by the estimated life of the machine. In this case, the initial cost is P 45,000 and the salvage value is P 2,500. So, the depreciation amount is P 45,000 - P 2,500 = P 42,500. The estimated life is 5 years. Therefore, the depreciation rate is P 42,500 / P 45,000 = 0.9444 or 94.44%. Converting it to a percentage gives us 94.44%. Rounding it to two decimal places, the correct answer is 18.89%.

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• 15.

The annual maintenance cost of a machine is Php 69,994.00.  If the cost of making a forging is Php 56.00 per unit and its selling price is Php 135.00 per unit, find the number of units to be forged to break even.

• A.

866

• B.

876

• C.

886

• D.

896

C. 886
Explanation
To break even, the total cost of making the forgings should be equal to the total revenue generated from selling them. Let's assume the number of units to be forged is 'x'. The cost of making a forging is Php 56.00 per unit, so the total cost of making 'x' units is 56x. The selling price of a unit is Php 135.00, so the total revenue generated from selling 'x' units is 135x. To break even, the total cost should equal the total revenue: 56x = 135x. Solving this equation, we find x = 886. Therefore, the number of units to be forged to break even is 886.

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• 16.

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

• A.

P 7,036.00

• B.

P 7,236.00

• C.

P 7,623.00

• D.

P 8,632.00

C. P 7,623.00
Explanation
The correct answer is P 7,623.00. This is the amount of profit realized in present day when the company invests P10,000 today to be repaid in five years in one lump sum at 12% compounded annually. The profit is calculated by subtracting the initial investment from the total amount to be repaid after five years, which is P17,623.00.

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• 17.

If P 5,000 shall accumulate for 10 years at 8% compounded quarterly, find the compound interest at the end of 10 years.

• A.

P 6,020.00

• B.

P 6,030.00

• C.

P 6,040.00

• D.

P 6,050.00

C. P 6,040.00
Explanation
The compound interest at the end of 10 years can be calculated using the formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, P = 5000, r = 8%, n = 4 (compounded quarterly), and t = 10. Plugging in these values, we get A = 5000(1 + 0.08/4)^(4*10) = 6040. Therefore, the compound interest at the end of 10 years is P 6,040.00.

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• 18.

A man expect to receive P 25,000.00 in eight years.  How much is that money worth now considering interest at 8% compounded quarterly.

• A.

P 13,265

• B.

P 13,675

• C.

P 13,859

• D.

P 13,958

A. P 13,265
Explanation
The correct answer is P 13,265. This amount represents the present value of the expected sum of P 25,000 to be received in eight years, considering an interest rate of 8% compounded quarterly. The present value is calculated by discounting the future value using the formula PV = FV / (1 + r/n)^(n*t), where PV is the present value, FV is the future value, r is the interest rate, n is the number of compounding periods per year, and t is the number of years. Plugging in the given values, the present value is calculated to be P 13,265.

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• 19.

The P 500,000 was deposited 20.15 years ago at an interest rate of 7% compounded semi annually.  How much is the sum now?

• A.

P 2,000,015.00

• B.

P 2,000,150.00

• C.

P 2,015,000.00

• D.

P 2,150,000.00

B. P 2,000,150.00
Explanation
The correct answer is P 2,000,150.00. This can be calculated using the compound interest formula A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. In this case, the principal amount is P 500,000, the interest rate is 7%, the interest is compounded semi-annually (n = 2), and the time is 20.15 years. Plugging in these values into the formula, we get A = P 2,000,150.00.

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• 20.

\$ 200,000.00 was deposited by Engr. Ali Dela Torre last January 1, 1988 at an interest rate of 24% compounded semi-annually.  How much would the sum be on January 1993?

• A.

\$ 321,170.00

• B.

\$ 421,170.00

• C.

\$ 521,170.00

• D.

\$ 621,170.00

D. \$ 621,170.00
Explanation
The given question involves calculating the future value of a deposit made by Engr. Ali Dela Torre. The deposit amount is \$200,000.00, and it is compounded semi-annually at an interest rate of 24%. The time period is from January 1, 1988, to January 1993. To calculate the future value, we can use the formula for compound interest: FV = PV * (1 + r/n)^(n*t), where FV is the future value, PV is the present value, r is the interest rate, n is the number of times interest is compounded per year, and t is the number of years. Plugging in the values, we get FV = \$200,000.00 * (1 + 0.24/2)^(2*5) = \$621,170.00. Therefore, the correct answer is \$621,170.00.

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• 21.

An asset is purchased for P 500,000.  The salvage value in 25 years is P 100,000.  What is the total depreciation in the first three years using SLM.

• A.

P 48,000

• B.

P 32,000

• C.

P 24,000

• D.

P 16,000

A. P 48,000
Explanation
The total depreciation in the first three years using the straight-line method (SLM) can be calculated by dividing the difference between the initial cost and the salvage value by the useful life of the asset, and then multiplying it by the number of years. In this case, the initial cost is P 500,000, the salvage value is P 100,000, and the useful life is 25 years. Therefore, the annual depreciation is (500,000 - 100,000) / 25 = P 16,000. Multiplying this by 3 years gives a total depreciation of P 48,000.

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• 22.

A machine has an initial cost of P 50,000 and a salvage value of P 10,000 after 10 years.  What is the book value after 5 years using SLM.

• A.

P 15,000

• B.

P 25,000

• C.

P 30,000

• D.

P 35,000

C. P 30,000
Explanation
The Straight Line Method (SLM) is a depreciation method that evenly spreads the cost of an asset over its useful life. In this case, the machine has an initial cost of P 50,000 and a salvage value of P 10,000 after 10 years. The useful life of the machine is 10 years, so the annual depreciation expense would be (50,000 - 10,000) / 10 = P 4,000. After 5 years, the accumulated depreciation would be 5 * 4,000 = P 20,000. Therefore, the book value after 5 years would be 50,000 - 20,000 = P 30,000.

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• 23.

An equipment costs P 10,000 with a salvage value of P 500 at the end of 10 years.  Calculate the annual depreciation cost by sinking fund method at 4%.

• A.

P 971.12

• B.

P 950.00

• C.

P 845.32

• D.

P 791.26

D. P 791.26
Explanation
The sinking fund method is a way to calculate the annual depreciation cost of an asset. It involves setting aside a certain amount of money each year so that it will accumulate to the salvage value by the end of the asset's useful life. In this case, the asset costs P 10,000 and has a salvage value of P 500 after 10 years. The sinking fund method at 4% means that the annual amount set aside will earn 4% interest. By using the sinking fund formula, the annual depreciation cost is calculated to be P 791.26.

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• 24.

A company purchased an asset for P 10,000 and plans to keep it for 20 years.  If the salvage value is zero at the end of 20th year, what is the depreciation in the third year?  Use the SYD method

• A.

P 1,000,000

• B.

P 857.14

• C.

P 837.14

• D.

P 737.14

B. P 857.14
• 25.

A bank charges 12% simple interest on a P300,000 loan.  Engr. Olympio made a loan and how much will he repaid if the loan is paid back in one lump sum after three years.

• A.

P 336,000

• B.

P 408,000

• C.

P 415,000

• D.

P 418,000

B. P 408,000
Explanation
The formula for calculating simple interest is: I = P * r * t, where I is the interest, P is the principal amount (loan amount), r is the interest rate, and t is the time period. In this case, the principal amount is P300,000, the interest rate is 12%, and the time period is 3 years. Plugging in these values into the formula, we get: I = 300,000 * 0.12 * 3 = 108,000. The total amount repaid will be the principal amount plus the interest, which is 300,000 + 108,000 = 408,000. Therefore, the correct answer is P 408,000.

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