PERFORMANCE

INNOVATIVE TASK

INDTECH 10 - INDUSTRIAL
economics
 PROBLEM:

t age 55 is Immediately after graduation, I was hired in a

ledge in manufacturing company in Cagayan de Oro City. I’m
f my earning based on minimum pay of Php365/day.
stimate the Because I understand the need to look for another
able source of income once I reach retirement at age
t aside to
55, I thought about setting up a savings plan so
ent? the money I saved can be used for investment.
and the Opt. Because of my busy schedule, my only way of
ade researching about possible means of investing is
ntil 2 through the internet. So I searched several banks
and my Website and studied their savings offerings
ion and my
Opt. especially noting on the interest rate they
nual 1 offer for their savings. A friend also
r expenses) advised me to look into cooperatives
and what they offer. Now that I know the interests
ar after I
offered by banks and cooperatives, I opted to
retirement settle with the one offering the highest rate.
Then proceeded with analysing my savings plan.
convention.
ade from my
mum is
BANK SAVINGS RATE
OFFERINGS
BANK NAME Interest rate

BDO 1.25%
METRO BANK 0.25%
Bpi 0.25%
Land bank 0.10%
Security bank 1.20%

Pnb 0.100%
Cooperative savings rate
offering
Cooperative INTEREST
name RATE
FICCO 1.5%

oic 2%
Cfi 3%
In option 1, I choose BDO savings because
It has the highest interest rate. The ficco is also one of the highest
interest rate but upon researching the cooperatives gets mutual funds
from their members to help the other members who are in need of financial
assistance. So I opted for BDO.

 Assume 26 working days/month

• Php 365/day
• Annual salary = 365(26 days)(12 months)
= Php 113, 880
• Assuming my estimated money for my other expenses is Php 80,000/year
• Php 113, 880 – Php 80,000 = Php 33,880 per year left for my savings

TARGET ANNUALLY SAVINGS TO REACH MY TARGET RETIIREMENT SAVINGS

𝒊
𝑨 = 𝑭⦋ ⦌
(𝟏 + 𝒊)𝒏 −𝟏

𝟏. 𝟐𝟓%
𝑨 = 𝟑, 𝟎𝟎𝟎, 𝟎𝟎𝟎
𝟏 + 𝟏. 𝟐𝟓% 𝟑𝟑 − 𝟏
𝑨 = Php 74,003.60
Php 74, 003.60 x 33 years = Php 2, 442, 118.8 when I reach my retirement

My annual savings can’t afford the annual target savings so option 1

doesn’t suit for me.
CASH - FLOW DIAGRAM
F= Php 3,000,000
I = 1.25%

0 1 2 3 32 33

A = Php 74,003.60
OPTION 2: Save regularly 20% of your pay annually

My annual salary = Php 113, 880

My annual savings = 113, 880 x 20% = Php 22, 776
(𝟏 + 𝒊)𝒏 −𝟏
𝑭 = 𝑨⦋ ⦌
𝒊
(𝟏 + 𝟏. 𝟐𝟓%)𝟑𝟑 −𝟏
𝑭 = 𝟐𝟐, 𝟕𝟕𝟔⦋ ⦌
𝟏. 𝟐𝟓%
𝑭 = 𝑷𝒉𝒑 𝟗𝟐𝟑, 𝟑𝟎𝟔. 𝟒𝟗𝟕𝟔
CASH FLOW DIAGRAM: F = Pph 923, 306.4976
I = 1.25%

0 1 2 3 32 33

A = Php 22, 776

Option 2 is more affordable than option 1 but will have
a lesser savings when reaching the target retirement
age. For me, I would still choose option 1 because at
the end I will have a larger amount to invest in a firm
that also has a highest interest rate.

Invested in a firm:
I = 18%
n = 10
P = Php 2,442,118.8
F = P(1+i) 𝑛

F = 2,442,118.8 (1 + 1.25%)10
F = Php 2, 765, 139.88