1. A manufacturer makes 7,900,000 memory chips per year. Each chip takes 0.

4
minutes of direct labor at the rate of P8 per hour. The overhead costs are
estimated at P11 per direct labor hour. A new process will reduce the unit
production time by 0.01 minutes. If the overhead cost will be reduced by P5.50
for each hour by which total direct hours are reduced, what is the maximum
amount you will pay for the new process? Assume that the new process must pay
for itself by the end of the first year.
a.) P25,017
b.) P10,533
c.) P17,775 *
d.) P16,425
2. The president of a growing engineering firm wishes to give each of 50
employees a holiday bonus. How much is needed to invest monthly for a year at
12% nominal interest rate, compounded monthly, so that each employee will
receive a P1000 bonus?
a.) P2070
b.) P3840
c.) P3940 *
d.) P4170
3. An engineering graduate plans to buy a home. She has been advised that her
monthly house and property tax payment should not exceed 35% of her
disposable monthly income. After researching the market, she determines she can
obtain a 30-year home loan for 6.95% annual interest per year, compounded
monthly. Her monthly property tax payment will be approximately $150. What is
the maximum amount she can pay for a house if her disposable monthly income
is P2000?
a.) P80000
b.) P83105 *
c.) P85200
d.) P90500
4. The designer of the penstock for a small hydroelectric cogeneration station has
the option of using steel pipe, wh1ch costs $150,000 installed and requires $5000
yearly for painting and leak-checking maintenance, or DSR4.3 (heavy-duty
plastic) pipe, which costs $180,000 installed and requires $1200 yearly for leakchecking maintenance. Both options have an expected life of 25 years. If the
interest rate is 8%, which choice has the lower present equivalent cost and how
much lower is it?
a.) DSR4.3 costs
b.) Steel pipe costs c.) DSR4.3 costs
d.) Steel pipe costs
less by $10,600.
less by $10,600
less by $65,000
less by $65,000
5. The maintenance cost for a car this year is expected to be $500. The cost will
increase $50 each year for the subsequent 9 years. The interest is 8%
compounded annually. What is the approximate present worth of maintenance for
the car over the full 10 years?
a.) $4300
b.) $4654 *
c.) $5300
d.) $5500
6-9 An oil refinery has decided to purchase some new drilling equipment for P5,
500, 000. The equipment will be kept for 10 years before being sold. The
estimated Salvage Value is P250, 000.Use this information to answer the following
questions:
6.) Using straight line method, the annual depreciation of the equipment is:
a.) P500000
b.) 515000
c.) P525000*
d.) P550000
7.) Using the straight line method, the book value at the end of the depreciable
life is
a.) P0
b.) P250000
c.) P350000
d.) P500000
8.) If the straight line depreciation is used and the equipment is sold for P350000
at the end of 10 years, the taxable gain on the disposal of the
a.) P0
b.) P250000
c.) P350000
d.) P500000

9.) If MACRS depreciation is used, the recovery period of the equipment using
GDS guidelines is
a.) 3 years
b.) 5 years
c.) 7 years
d.) 10 years
10.)