Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 2: (13 pts) As part of your retirement you plan to invest in some blue-chip stocks whenever you have extra savings. At the beginning

image text in transcribed

Problem 2: (13 pts) As part of your retirement you plan to invest in some blue-chip stocks whenever you have extra savings. At the beginning of last year, you invested 10,000 URC shares when the stock price is at P3.15. Today you invested another 10,000 URC shares for P3.00 per share. You also plan to invest P25,000 in JFC at the end of next year, and P15,000 in MEG a year after JFC investment. 1 year after MEG investment you open a savings account worth P38,000. Today is 12/31/2019. The historical spot rates are 8.5% and 9% for 1 year and 2 years ago, respectively. Use the Table 1 of Problem 1 for the expected rates. 1. Calculate the value of each investment as of today. 2. How much is the value of your retirement plan 5 years from today? 3. If instead of investing in different time period, you invested made a one-time investment of P200,000 at the end of last year. (a) Which of the two investment strategies has a higher value? (3 pts) (b) How much is the percentage difference of the two strategies? (1pt) Problem 2: (13 pts) As part of your retirement you plan to invest in some blue-chip stocks whenever you have extra savings. At the beginning of last year, you invested 10,000 URC shares when the stock price is at P3.15. Today you invested another 10,000 URC shares for P3.00 per share. You also plan to invest P25,000 in JFC at the end of next year, and P15,000 in MEG a year after JFC investment. 1 year after MEG investment you open a savings account worth P38,000. Today is 12/31/2019. The historical spot rates are 8.5% and 9% for 1 year and 2 years ago, respectively. Use the Table 1 of Problem 1 for the expected rates. 1. Calculate the value of each investment as of today. 2. How much is the value of your retirement plan 5 years from today? 3. If instead of investing in different time period, you invested made a one-time investment of P200,000 at the end of last year. (a) Which of the two investment strategies has a higher value? (3 pts) (b) How much is the percentage difference of the two strategies? (1pt)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Tools for Business Decision Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

6th Canadian edition

1118644948, 978-1118805084, 1118805089, 978-1118644942

Students also viewed these Finance questions

Question

Name the different levels of the hierarchy of needs. (p. 264)

Answered: 1 week ago