Read the given situation below; then, answer the questions that follow. Security for our future is always our main concern why we opted for savings. But money carned sometimes is so enticing that we...

GENERAL MATHEMATICS


Extracted text: Read the given situation below; then, answer the questions that follow. Security for our future is always our main concern why we opted for savings. But money carned sometimes is so enticing that we opted not to spare for future use. The existence of retirement, life or insurance plans in the market is so evident and with good market value. Many insurance companies of all forms involved problems about present and future value of money with a single cash flow which is either invested at the start(future value problems) or to be received at the end (for present value problems). However, money earned or financial events rarely happen on just a single event. It is common for workers or the employed community or receivers of remittances to receive them every 15 days or monthly. This is to pay monthly utility bills such as water, electricity or loans and most importantly basic needs, and likewise, to be able to set aside for savings on a regular basis. With this normal and functional routine, it is important to be able to establish a methodology to efficiently compute the future value and present value of regular cash flow streams. Two insurance companies offer you a future value of one million pesos after retirement at the age of 60. The first company offers a monthly premium of Php1, 356. 25 at 5% interest compounded semi-annually while the second company offers a monthly premium of Php1, 115. 35 at 3% compounded quarterly. 1. If you are 21 years old now and working, which company will you prefer to invest and save your money? Why? Explain comprehensively your answer in at least three statements.