You are contemplating investing some surplus funds and the following options are available: 1. Invest $50,000 @ 4% p.a. compounded annually for 5 years. 2. Invest $45,000 @ 3% p.a. compounded quarterly for 5 years. 3. Invest $40,000 4.5% p.a. compounded semi-annually for 5 years. 4. Invest $50,000 @ 3% p.a. compounded semi-annually for 5 years. 5. Invest $55,000 @ 0.5% p.a. compounded weekly for 5 years Which one of the above is the second-best option?

Problem 1: You can choose between two different investments: (A) an annuity that pays $10,000 each year for the next 6 years; (B) a perpetuity that pays $10,000 forever, starting 11 years from now. 1. Which investment do you choose, A or B, if the interest rate is 5%? What if it is 10%? Explain in words the reason behind your choices.

You have the ability to invest $100,000 and have a choice between the following investments that return $150,000 over the next 5 years: Year A B C D 1 $10,000 $30,000 $50,000   2 $20,000 $30,000 $40,000   3 $30,000 $30,000 $30,000   4 $40,000 $30,000 $20,000   5 $50,000 $30,000 $10,000 $150,000 Required: a. Based on cash flows given, with no other analysis, which investments would be a good investment? Which would be a bad investment? b. Based on cash flows given, and no other analysis, rank the investments based on preference/ desirability. Rank 1st, 2nd, 3rd, 4th. If ties, please explain why! c. If you analyzed the cash flows, what would you do? Briefly explain NOTE: Each of the above requires a short narrative answer.

Suppose that you have an opportunity to invest in a fund that pays 12% interest compoundedannually. Today, you invest P10,000 into this fund. Three years later, you borrow P5,000 from alocal bank at 10% effective annual interest and invest it in the fund. Two years later, you withdrawenough money from the fund to repay the bank loan and all interest due on it. Three years laterfrom this withdrawal you start taking P2,000 per year for 5 years out of the fund. After 5 years, youhave withdrawn your original P10,000. The amount remaining in the fund is earned interest. Howmuch remains?