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How to invest in the best company

Samir Fernando Latorre P.

Sebastián Granados L.
March 2020
Colegio San Viator Bilingüe Internacional
Math
9-45
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Introduction
To invest in the best company, you must take into account many circumstances,

such as knowing if you are going to generate profits every year, or every month or semi-

annually, you must take into account the periods in which you are going to invest, another

important factor is that you must see how much they offer you as interest and what you

must pay. Finally, this is what will generate profits for the rest of the maximum 10 years

that you can invest in a company, at this moment you can choose between three very good

companies, Werbel, Taxos and Kender, the first is a company that is dedicated to the sale of

bicycles and is considering the possibility of expanding his business towards the sale of

clothing and accessories used for cycling, the second company is fast food and they are

going to expand their business chain, finally, the company Kender is a clothing company.

finally, now it is your decision to choose. Which one do you want to choose?

Goals

 Identify how to invest in the best company. 

 Recognize through graphic analysis, the investment of people from a given sample.

 
 Look at the different project tables to support your decision.
 
 Compare you choose with the profit through years you acquired in each investment. 

 Choose the most adaptable into a variation of opportunities with each project.

  
 Make the final decision after view the results and advices of your financial advisor. 
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Requirements: 

3) The amount of money that we suggest asking the bank would be the minimum

(2500 dollars), this is because if you ask for more money your interest and insurance would

increase, leading to a big debt, asking for more does not have as much benefit as asking for

the mandatory minimum. The client needs to take into account the specific payments that

he/she must do: His/her final money or capital must be superior to the amount of money

he/she owes, if not he/she could be in bankruptcy, that is why he/she needs to choose the

best option. Also, the interest has a protagonist paper in the general capital, the years of

availability that the client has at the time of recovering the money she/he have, the bank

also have a deadline of the pay of the money they borrow, so the client need to take into

account that variable that is time. 

4) The best option that we recommend is the number 3, or Kender´s investment, that

is because the monthly interest can be converted into a year interest, this year interest is

superior to the other investments, in the Kender business you need to invert 4000 dollars

this amount of money at the end of the 8 years stipulated plus the interest that is the

11,53% would give a total of 461,2 dollars, plus the initial capital 4461,2 dollars, the other

investments start with low or same money but the interest is lower, this give an advantage

in the 3 project, the other advantage is the time, with lowest interest an many years the

capital could be acceptable, but in the third project the interest and rate of years are above

the other investments being the one with the most profit of the 3. 

 
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5) Graphical Sampling Analysis

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WERBEL CON FLUJO DE SALIDA

INTEREST CAPITAL
Flujo de Salida
$ 5,000
$ 4,500
$ 4,000
$ 3,500
$ 3,000
$ 2,500
$ 2,000
$ 1,500
$ 1,000
$ 500
$-
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

WERBEL

INVESTMENT $ 2.500 Dólares INVESTMENT $ 2.500 Dólares

RATE 12,03 Annual RATE 12,03% Annual
PERIODS 10 Years PERIODS 10 Years

PERIOD INTEREST CAPITAL PERIOD INTEREST CAPITAL Flujo de Salida

1 $ 301 $ 2.801 12,4% 1 $ 301 $ 2.801 0
2 $ 337 $ 3.138 2 $ 337 $ 3.138 0
3 $ 377 $ 3.515 3 $ 377 $ 3.515 0
4 $ 423 $ 3.938 4 $ 423 $ 3.938 0
5 $ 474 $ 4.412 5 $ 474 $ 4.412 $ 1.912
6 $ 531 $ 4.942 6 $ 301 $ 2.801 $ 301
7 $ 595 $ 5.537 7 $ 301 $ 2.801 $ 301
8 $ 666 $ 6.203 8 $ 301 $ 2.801 $ 301
9 $ 746 $ 6.949 9 $ 301 $ 2.801 $ 301
10 $ 836 $ 10.285 10 $ 301 $ 2.801 $ 2.801
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Note: This graphic is from Werbel is without the outflow, the interest and the

capital increases in a linear form by their own rate, but the line of the capital when it

reaches the 9 year it changes the rate and increase faster almost reaching the 1500$.

The Werbel with outflow have some differences, one is that its capital starts by

increasing from 2500, 2600 to 4400 in the year 5, then it decreases to the same value it was

in the year 6, it stayed like that until the final. The outflow line starts from 0 until the 4 year

and decreases to more or less 1900$ this show us that until 4 years the client cannot take

out her/his money, it only lasts 1 year and then it decrease into 400$, it keeps like that until

it reach the 9 year and then it increase to 2600-2700 in 1 year, the last line is from the

interest it have a linear increasing until it reach the 5 year reaching the 500$ then it

decrease 100$ in one year, staying until the 10 years in the same place. 

Proyecto 2

INVESTMENT $ 2.987 Dólares INVESTMENT $ 2.987 Dólares

Tasa 6,10% Semestral Tasa 6,10% Semestral
Tasa anual (primeros7 años)
12,57% Anual Tasa anual (primeros7
12,57%
años) Anual
Tasa después 7 años 5,80% Semestral Tasa después 7 años5,80% Semestral
Tasa anual después 11,9% Anual Tasa anual después 11,9% Anual
RATE 12,03 Annual RATE 12,03 Annual
PERIODS 10 Years PERIODS 10 Years

PERIOD INTEREST CAPITAL PERIOD INTEREST CAPITAL Flujo de salida

1 $ 376 $ 3.362 1 $ 376 $ 3.362 $ 376
2 $ 423 $ 3.785 2 $ 376 $ 3.362 $ 376
3 $ 476 $ 4.261 3 $ 376 $ 3.362 $ 376
4 $ 536 $ 4.797 4 $ 376 $ 3.362 $ 376
5 $ 603 $ 5.400 5 $ 376 $ 3.362 $ 376
6 $ 679 $ 6.079 6 $ 376 $ 3.362 $ 376
7 $ 764 $ 6.843 7 $ 376 $ 3.362 $ 376
8 $ 817 $ 7.660 8 $ 357 $ 3.344 $ 357
9 $ 914 $ 8.574 9 $ 357 $ 3.344 $ 357
10 $ 1.023 $ 12.585 10 $ 357 $ 3.344 $ 3.344
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Note: In the Taxos graph without outflow, its interest increases in a linear way, it

keeps like that all the years, and the capital stayed like the same until it reaches the year 9

with a money of 8,500 it increases in one year to 12,500$.  

In the Taxos with outflow the capital stays the same 3400 in all the 10 years, the

interest stays the same 400 all the 10 years, the outflow change from 400 until it reaches

3400 in one last year. 

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Note: Now Kender without outflow show us the interest that have a low rate of

increasing going from 4000 to 14000, the capital in other part have also a linear increasing

but when it reaches the year 7 it changes completely going from 84 to 126. 

In this final graph of Kender with outflow we can see that the capital start very

high from 29000 to 39000 dollars, the interest maintains its linear function from 4700 to

6300 without changes, the line outflow is a little bit lower than the interest increasing at the

same way, but if we you can see when it reaches the year 7 it goes from 4500 to 33100

dollars. The most notable change we can see it in the Kender graph with the great change of

the outflow, affirming the advice and conclusion of the best investment.  

6) Amortization Table

7) As you can see in the table, it is almost impossible not to pay 3600 dollars in 10

years, for this reason, financial mathematics gives us the possibility of making a column

which is called an extraordinary fee which gives us the possibility of modifying two
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aspects. 1, term and 2, fee, in this case we are modifying the term, since the credit is

initially 27 years but according to this and according to the statistics, the credit will be paid

in full in the first 8 years.

8) In the first project, the client could take the money he had gain after the 4 year,

the gain could be superior if she/he wanted to pick up her/his money after a period of time

of 10 years, to more years more money, added to the interest 12,03% her/his profit could go

good but the difference of the bank debt could leave the client with lower money than the

other investments, with a minimum requirement of 2500 dollars. The second investment in

the company Taxos is quite more beneficent than the other, this because its interest

surpasses the Welber one being 6,1 semesterly, this can be converted into yearly, so it

would be 12,2% added to the 2986 invest needed by the company is superior to

the Werbel one, the period of years that the invest is need in the company is 7, compared to

the 4 years that Werbel need is quite more years. Finally, the investment 3 in the

company Kender offer the investor the 1,3% of interest per month, this per year would be

15,6% being the biggest interest in the 3 investments, the capital plus the interest and the 8

years stipulated would make this investment the best to choose.

9)  In this case, the first project is discarded, since in the first 4 years it will not be

possible to withdraw interest and capital, and a loan must also be paid. The second was also

ruled out because it gives me a lower annual rate than what the Kender company offers.

And the best option is the Kender project, because is the option that will generate more

profits for you.

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10) As I mentioned before, the suggestions that I give to the client who is going to

buy some type of stock in any company would tell him to look at the company that would

give him the most profit, in this case, you can see that in Kender's company, you generate

more profit. for example, the Kender company generates in less time the same amount of

silver that Werbel generates in 10 years, besides, the annual interest rate is better than that

generated in the first two companies since it is 16, 77% which at the end of each year, you

can withdraw all the interest you earn.

11) In conclusion the best investment that we advise the client is the 3, even if the

time is much longer, the profit increases exponentially, bank debt can be paid without any

problem and the client´s money would be greater than the other options. It goes without

saying that it is a mere division of the client to choose the one that best suits their needs for

time and money, taking into account their interest shown in the table above. This can be

applied at a 100% in every investment or business to found out what profits and benefits

could have a project of business if we want to invest in it. So, the financial mathematics

could help us really much if we wanted to study in different economic and financial of

investment or financing projects.