Scenario 1. Your grandparents gave you ₱ 175,000.00 on your 16th birthday. You were instructed to invest the money so that the earnings can be used to pay for your tuition fee in college. Having heard...

Scenario 1.

Your grandparents gave you ₱ 175,000.00 on your 16th birthday. You were instructed to invest the money so that the earnings can be used to pay for your tuition fee in college. Having heard about the risks and rewards of the stock market from your parents, you become interested in buying stocks in a particular company. Below are the options are given to you by your parents:

Option 1: Company ABC’s selling stock is ₱ 1,500.00 per share that will have a dividend of ₱200.00 per year. The stock can be sold after two years at ₱2,000.00 and the market requires a rate of return of 15%.

Option 2: Company XYZ’s selling stock is ₱ 1,000.00 per share that will have a dividend of ₱180.00 per year. The stock can be sold after two years at ₱2,000.00 and the market requires a rate of return of 7%.

In which company will you invest your money? Why? (WITH SOLUTION)