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please help me answer this. thank you so much PROBLEM 1: A 50-year-old man decided to put funds into a college investment fund for his
please help me answer this. thank you so much
PROBLEM 1: A 50-year-old man decided to put funds into a college investment fund for his grandson. He can save P25,000 a year and his bank allows him to earn 5% on his savings. Questions to answer: 1) How much will he have accumulated if he retires at age 65 and stops saving for the fund? 2) What is the interest factor? 3) What type of investing is this: normal compounding, ordinary annuity or annuity due? PROBLEM 2: For 10 years, you invest P5,000 in a bank which grants 7% interest on savings, compounded annually. Questions to answer: 4) How much interest will you earn if you don't touch the fund in the bank and continue investing? 5) How much interest will you earn if you annually withdraw the earned interest? 6) What is the interest factor for the first scenario? PROBLEM 3: You are an heiress of a very rich shopping mall conglomerate and your dying grandmother asked you to make a decision regarding her parting gift to you. Either you get a one-time-big-time amount of P50M after 5 years or get P10M at the end of every year for 5 years. Funds in the banks generally earn 6% interest, compounded annually. Questions to answer: 7) How much is the present value of the P50M? 8) How much is the future value of the P10M payouts? 9) What would be the better option? 10) What are the interest factors for both scenariosStep by Step Solution
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