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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Read the following scenario, Answer the question below. M. Sotto won PHP10.million in the lottery. He was very excited to collect his winnings 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 following options: •Get 8.1 million upfront •Receive 1 million every year for 10 years •Receive 1.8 million every year for 5 years The current government bonds have a yield of 5% per annum. Which is the best option? Answer: Option 1 = Option 2 = PV = %3D Option 3 = PV = %3D
Soo Ling wants to start a business that she believes can produce cash flows of RM5,600, RM48,200, and RM125,000 at the end of each of the next three years, respectively. At the end of three years, she thinks she can sell the business for RM250,000. At a discount rate of 16 percent, what is her business worth today? Select one: A. RM314,011.33 B. RM297,077.17 C. RM325,837.81 D. RM280,894.67
D9)
To illustrate: a) Mr. San Juan has a total savings of P 300,000 which he invested in a business venture b) Knowing that this will not be enough, he borrowed P 150,000 from BDO c) He searched for a site, near a school to start a computer business. He purchased a desktop computers for P 350,000 and some paper supplies for 50,000. d) The remaining P 50,000 he put aside as cash reserve for his future needs During the month of October, the following transactions took place: He has a sales revenue of P 80,000 in cash Utility expenses of P 15,000 for the rent, P 5,000 for the water and electricity, and P 4,000 for the internet. For the paper supplies, he already used up 50% that he bought. Prepare the reports. 1/2 A. Statement of Income (wealth produced for October): Sales Rent Water and Power Supplies used Internet Profit for October B. Statement of Changes in Equity for October: San Juan, Capital October 1 Add Profit San Juan, Capital October 31 C. Statement of Cash Flows for October: Cash…
Mr. Ahmet, who won a prize of 1 million USD by participating in a quiz show, will provide a significant return if he uses it in repo, time deposit and bonds. However, careful decisions need to be made as to which area to invest. If the money is deposited in the bank, the bank pays interest once a month and pays 16% interest. Mr. Ahmet wants to buy 2 houses, one worth 900000 USD and the other 500000 USD, in the future, by investing this money in the bank. Accordingly, after how long is it possible for Ahmet Bey to buy these two houses with the money and income he earned? If you were Mr. Ahmet, how would you advise him to use this money?
4. You are thinking of buying house for $70,000. The house will be worth $100,000 in five years. A. Should you buy the lot if r = 0.05? (r= interest rate a bank would pay you) B. Should you buy it if r = 0.10? (r= interest rate a bank would pay you)
(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.
Elise and Carlo would like to accumulate three times their monthly expenses in monetary assets. They currently have Php2,800 in their money market account, and their monthly expenses are Php4,500. How much more do they need in their money market account to reach their goal?Note:The answer should the 11,710
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?
Ms. Jampal is planning to open a laboratory for Covid-19 test in Chiang Mai on 1st October 2022 with her own money 1 million $ plus another 1 million $ that she will borrow from her friend for 10 years with 6.25% interest rate. But if she decides not to do this business and put her 1 million$ in a stock fund instead, she expects to get 9% return. So, she decides to use 9% as her company's cost of equity. She will use 1.8 million$ of the company's money to build laboratory and buy equipment. The laboratory and equipment are expected to be used for 10 years. The remaining 0.2 million $ will be used as working capital during year 1-10. The first year's revenue is expected to be 1 million $ and grow 2% every year (from previous year). Estimated COGS is 50% of Sales/Service, and S, G & A expense is 15% of Sales/Service. The company pay tax at 20%. Should she run that business? Why or why not?
1. Zaggy Zargawhoop has an idea for a new business. In order to develop his idea, he needs to invest $600 today. Zaggy's idea will pay off $690 next year for certain. Suppose that Zaggy has no savings to fund his idea and has to borrow money from the bank. a. Suppose that the interest rate for borrowing and for lending is 12%. Should Zaggy borrow money from the bank to fund his idea? b. Suppose that the interest rate for borrowing and for lending is 22%. Should Zaggy borrow money from the bank to fund his idea? Now suppose that Zaggy has $600 in his bank account. c. Suppose that the interest rate for borrowing and for lending is 12%. Should Zaggy withdraw his savings to fund his idea? d. Suppose that the interest his savings to fund his idea? e. Does the method of financing (whether through savings or debt) appear to affect the relationship between the interest rate and the decision to undertake investment? Explain. for borrowing and for lending is 22%. Should Zaggy withdraw
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