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What is the future value of money in option two

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Question - Problem-Solving and Analysis - Analyze each problem below and provide answers what are being asked. Show your computation.

As a financial manager, you would like to make a investment decision for the Amazing Company. Currently, the company has P12 million available for investment that will take a period of twelve (12) years and you have to choose from the options. Compute the time value of money per option. After which, state your decision.

Option 1: Invest in a lending which will earn 20 percent per annum compounded annually.

Option 2: Invest in a joint venture which will earn 16 percent compounded annually.

a. What is the future value of money for option 1?

b. What is the future value of money in option 2 if investment of P1 million will be made at the end of each year for period of 12 years?

c. What is the present value of money in option 2 if the investment of P1 million will be made at the end of each year for period of 12 years?

d. What is the future value of money in option 2 if investment of P1 million will be made at the start of each year for period of 12 years?

e. What is the present value of money in option 2 if the investment of P1 million will be made at beginning of each year for period of 12 years?

g. Analyse the results from a to d and state your decision.

Reference no: EM133184102

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