4. Which Offer has a better Fair Market Value? Company A offers P150,000 at the end of 3 years plus P300,000 at the end of 5 years. Company B offers P25,000 at the end of each quarter for the next 5 years. Assume that money is worth 8% compounded annually. COMPANY A COMPANY B P150,000 at the end of 3 years P25,000 at the end of each P300,000 at the end of 5 years quarter for 5 years
4. Which Offer has a better Fair Market Value? Company A offers P150,000 at the end of 3 years plus P300,000 at the end of 5 years. Company B offers P25,000 at the end of each quarter for the next 5 years. Assume that money is worth 8% compounded annually. COMPANY A COMPANY B P150,000 at the end of 3 years P25,000 at the end of each P300,000 at the end of 5 years quarter for 5 years
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
Related questions
Question
Please answer number 4
Transcribed Image Text:mple
Direction: Solve the following problems. Answer as indicated. Write your answers in a
separate sheet of paper
1. In a certain account providing an interest rate of r compounded quarterly, P2,500 is deposited
000.
every end of the quarter. What value of r will make the future value of the account P5,200 in six
months?
2. In order to save for her high school graduation, Marie decided to save P200 at the end of each
month. If the bank pays 0.250% compounded monthly, how much will her money be at the end
of 6 years?
3. Paolo borrowed P100,000. He agrees to pay the principal plus interest by paying an equal
amount of money each year for 3 years. What should be his annual payment if interest is 8%
compounded annually?
4. Which Offer has a better Fair Market Value?
Company A offers P150,000 at the end of 3 years plus P300,000 at the end of 5 years.
Company B offers P25,000 at the end of each quarter for the next 5 years. Assume that money is
worth 8% compounded annually.
COMPANY B
COMPANYA
P25,000 at the end of each
P150,000 at the end of 3 years
quarter for 5 years
P300,000 at the end of 5 years
5. Kat received two offers for investments. The first one is P150,000 every year for 5 years at 9%
compounded annually. The other investment scheme is P12,000 per month for 5 years with the
same interest rate. Which fair market value between these offers is preferable?
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