#### Problem Statement: CHAPTER 2 Interest and Money-Time Relationship

**Solved Supplementary Problem 2.15**

M purchased a small lot in a subdivision, paying P200,000 down and promising to pay P15,000 every 3 months for the next 10 years. The seller figured interest at 12% compounded quarterly.

(a) What was the cash price of the lot?

(b) If M missed the first 12 payments, what must he pay at the time the 13th is due to bring him up to date?

(c) After making 8 payments, M wished to discharge his remaining indebtedness by a single payment at the time when the 9th regular payment was due, what must he pay in addition to the regular payment then due?

(d) If M missed the first 10 payments, what must he pay when the 11th payment is due to discharge his entire indebtedness?

#### Problem Answer:

(a) The cash price of the lot is **P546,722**.

(b) He must pay **P234,270** at the time the 13th is due to bring him up to date.

(c) He must pay **P300,006** in addition to the regular payment then due.

(d) He must pay **P479,948** when the 11th payment is due to discharge his entire indebtedness.

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- Solution: What is the effective rate of interest of the loan?
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- Solution: How much of the original principal is still unpaid after he has made the 8th payment?
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