the rate of 6% per year compounded annually. If all the money is allowed to accumulate, how much must be deposited initially so that ₱5000will have accumulated after 10 years? 5. A student plans to deposit ₱600each year in a savings account, over a period of 10 years. If the bank pays 6% per year compounded annually, how much money will have accumulated at the end of the 10-year period? Let’s AnalyzeActivity 1: Getting acquitted with the essential terminology and basic concepts in the study of engineering economy is not enough, one should be able to analyze and solve complex cost problems involving interest, cash flow analysis, annuities and decision making methods. At this juncture, you will be required to elaborate your answers about the following questions: 1. An engineer who is planning his retirement has decided that he will have to withdraw ₱10 000 from his savings account at the end of each year. How much money must the engineer have in the bank at the start of his retirement, if his money earns 6% per year, compounded annually, and he is planning a 12-year retirement (say 12 annual withdrawals)?
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College of Engineering Education
2
nd
Floor, B&E Building
Matina Campus, Davao City
Telefax: (082) 296-1084
Phone No.: (082)300-5456/300-0647 Local 133
Page
39
of
43
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2. An engineer is planning for a 15-year retirement. In order to supplement his pension and offset the anticipated effects of inflation, he intends to withdraw₱5000 at the end of the first year, and to increase the withdrawal by ₱1000 at the end of each successive year. How much money must the engineer have in his savings account at the start of his retirement, if money earns 6% per year, compounded annually?
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3. How much money must initially be deposited in a savings account paying 5% per year, compounded annually, to provide for ten annual withdrawals that start at ₱6000 and decrease by ₱500 each year?
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4. A man has deposited ₱50 000 in a retirement income plan with a local bank. This bank pays 9% per year, compounded annually, on such deposits. What is the maximum amount the man can withdraw at the end of each year and still have the funds last for 12 years
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College of Engineering Education
2
nd
Floor, B&E Building
Matina Campus, Davao City
Telefax: (082) 296-1084
Phone No.: (082)300-5456/300-0647 Local 133
Page
40
of
43
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5. A man has deposited ₱50 000 in a retirement income plan with a local bank. This bank pays 8.75% per year, compounded annually, on such deposits. What is the maximum amount the man can withdraw at the end of each year and still have the funds last for 12 years?
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In a Nutshell
Activity 1:
Based from the definition of the most essential terms in the study of curriculum and
the learning exercises that you have done, please feel free to write your arguments or lessons
learned below. I have indicated my arguments or lessons learned.
1.
Annuities is an end of year equal payments.


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