1. Mr.SottowonPHP10millioninthelottery.Hewasveryexcitedtocollecthiswinnings and had several plans for his PHP10 million. He would buy his dream house, car, and a lot more. However, he was very disappointed when the officers from PCSO said that he will not get his PHP10 million pesos upfront. He, however, has the followingoptions: • Get 8.1 millionupfront • Receive 1 million every year for 10years Receive 1.8 million every year for 5years The current government bonds have a yield of 5% per annum. Which is the best option?

1. Mr.SottowonPHP10millioninthelottery.Hewasveryexcitedtocollecthiswinnings and had several plans for his PHP10 million. He would buy his dream house, car, and a lot more. However, he was very disappointed when the officers from PCSO said that he will not get his PHP10 million pesos upfront. He, however, has the followingoptions: • Get 8.1 millionupfront • Receive 1 million every year for 10years Receive 1.8 million every year for 5years The current government bonds have a yield of 5% per annum. Which is the best option?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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6. Xander invested P35.000.00 in a savings account that pays 4% simple interest. How much will he ean after 3 years? What will the new balance be? 7. Two cars leave a town and travel in opposite directions. One car travels at the rate of 45 kph, and the other at 55 kph. In how many hours will the two cars be 350 kilometers apart?
(Related to Checkpoint 5.6) (Solving for i) Kirk Van Houten, who has been married for 21 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $11,500 in 9 years. Kirk currently has $4,505 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring? The annual rate of return Kirk must earn on his investment to accumulate enough money to pay for the ring is %. (Round to two decimal places.)
(B) Mc Gregor has just won a prize in a game show with the winning prize worth RM30 million. However, he was given two options to receive those prizes: a. Option 1: Receive RM1 million for next 30 years beginning now. b. Option 2: Receive RM1.5 million each year from year 1 until 10" year, RM500,000 from 11 to 20 years and RM1 million from 21 until 30 years. Required : () Suggest which of the two is the better option and assuming the interest rate at 7 percent for the next 30 years. (Please show your work). (ii) If she is offered third options, which is to receive RM12 million one lumD Sum amount now. What is the rate of interest, that makes Mc Gregor indifferent to choose either option one or three (Show the answer to two decimal points)?
1 AND 2
Azree an accountant, working for a foreign consultant firm and earning RM 78,000 per year is contemplating giving up his job and set up his own tax consultant firm. He estimates that renting an office would cost RM 780 per month, hiring a secretary with salary RM 1,500 per month and purchasing for required supplies would cost him RM 10,000 per annum. He estimated that his total revenues for the year would be RM 120,000. a) Calculate the explicit cost and implicit cost
(b) Samuel Gumede earns £39,000 a year working for a building company as a project manager. He is considering the possibility of leaving the company and starting his own business. To do this, he will have to use all his £60,000 savings that are currently invested at an interest rate of 2%. He estimates that the annual profit from his own business will be £50,000. Other relevant costs in starting his own business amount to £1,750. Required: Using the information above, calculate the net relevant benefit of Samuel starting his own business.
2. Jane Summers has just inherited millions from her mother's estate. She is considering investing part of these funds in a small catering business. She would need to purchase a delivery van, equipment, and inventory costing $150,000 to equip the business. Jane's marketing studies indicate that the annual net cash inflow from the business will amount to $36,000. Jane wants to operate the catering business for only 6 years. She estimates that the equipment will have a $10,000 salvage value at the end of that time and that she will just retire and close down the business. Jane's required rate of return is 10%. (Note: relevant present value tables are in the textbook in ch 26 at pg 1121, or use from other sources, as desired.)Required:Compute the net present value of this investment. What would you advise Jane based on your calculations? Show your calculations, including any present value table amounts.
Vincent has chosen to buy a new car with a cost of $14 000, inclusive of HST. He has saved $5000 for a down payment. How much must be financed? Enter a numeric value only, rounded to 2 decimals places. An answer of $100 should be entered as 100.00.
How do I work this problem in excel? You have been offered $3,000 in 4 years for providing $2,000 today into a business venture with a friend. If interest rates are 10%, is this a good investment for you?
(Related to Checkpoint 5.6) (Solving for) Kirk Van Houten, who has been married for 22 years, would like to buy his wife an expensive diamond ring with a platinum setting on their 30-year wedding anniversary. Assume that the cost of the ring will be $12,000 in 8 years. Kirk currently has $4,487 to invest. What annual rate of return must Kirk earn on his investment to accumulate enough money to pay for the ring? The annual rate of return Kirk must earn on his investment to accumulate enough money to pay for the ring is (Round to two decimal places.) ||| < %.
A8) Gerry is considering buying a small business that makes t-shirts. He plans on running the business for 17 years before selling it. He expects to make $25,506 each semiannual period for the 17 years that he owns the business with his first $25,506 realized at the end of the first semiannual period. He has also contracted with 3 large events to make t-shirts that will generate cash flows of $17,639, $22,850, and $11,555 in 3 years, 9 years and 13 years respectively. At the end of year 17 he plans to sell the business of $186,090 after collecting the $25,506 in annual revenue. How much should he pay for the business if the interest rate is currently 13.63%
Kindly assist on questions below. (1) A person has wealth of $ 40000. If they have an accident they mush spend $ 30000 on car repairs. Their utility function is given by U = w1/2 where w is equal to their wealth . They do not get into an accident with 90% chance and they get into an accident with 10 % chance. What is the total fair premium for full insurance for this person. (2) Risk pooling can decrease risk if: a) Risks are independent b) risks are dependent c) enough people pool their risk d) if the amount if risk is small enough e) if people have different risk preferences

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