LYCEUM-NORTHWESTERN UNIVERSITY

Dagupan City
INSTITUTE OF GRADUATE AND PROFESSIONAL STUDIES

Financial Management
Summer 2020
Doctor of Business Administration
DR. PEDRO F. SISON
Professor

FINANCIAL MANAGEMENT FOR

SUSTAINABLE DEVELOPMENT

(EXAMINATION)

BY : Apple Joy P. Biay

MBA - Student

Financial Management and Sustainable Development Exam

By: DIANA MARIE D. LAGUARDIA

MBA - Student
Answer:

Starratt Alexander is considering investing specified amounts in each of four investment

opportunities described below. For each opportunity, determine the amount of money Starratt
will have at the end of the given investment horizon.

Investment A: Invest a lump sum of $2750 today in an account that pays 6 per cent annual
interest and leave the funds on deposit for exactly 15 years.

Investment B: Invest the following amounts at the beginning of each of the next five years in a
venture that will earn 9 percent annually and measure the accumulated value at the end of
exactly five years:

Beginning of Year Amount

1 $ 900
2 $ 1,000
3 $ 1,200
4 $ 1,500
5 $ 1,800

Investment C: Invest €1200 at the end of each year for the next ten years in an account that
pays 10 per cent annual interest and determine the account balance at the end of year 10.

Investment D: Make the same investment as in investment C but place the €1200 in the
account at the beginning of each year.

Answers:

Investment A:
Future value=$ 2,750 x (1+0.06)15
¿ $ 2,750 x (1.06)15
¿ $ 2,750 x (2.3966)

¿ $ 6 , 590. 54

Investment B:
Future value=[ $ 900 x( 1.09)¿¿ 5]+[$ 1000 x (1.09)¿ ¿ 4]+[$ 1200 x (1.09)¿¿ 3]+[$ 1500 x(1.09)¿¿ 2]+¿ ¿ ¿ ¿ ¿
¿ ( $ 900 x 1.5386 ) + ( $ 1000 x 1.4116 )+ ( $ 1200 x 1.2950 ) + ( $ 1500 x 1.1881 ) +($ 1800 x 1.09)
¿ 1384.74+1411.6 +1554+1782.15+1962
¿ 8 , 094 . 49
Investment C:
(1+0.1)10−1
Future value=$ 1200 x[ 0.1 ]
2.5937−1
¿ $ 1200 x [ 0.1 ]
1.5937
¿ $ 1200 x [ 0.1 ]
¿ $ 1200 x 15.937
¿ $ 19120. 8

Investment D:
Future value=$ 19120.8 x 1.09
¿ $ 20841. 67