Polytechnic University of the Philippines

College of Business Administration

Department of Marketing Management

KENJI P. BALITAO

BSBA MM 3-3N

ASSESSSMENT #1

1. Explain the time value of money.

“The time value of money” as discussed on the previous lesson talks
about the concept of when to get or to give the money which makes it more
valuable. This concept shows that money has its potential earning capacity or
what we call “opportunity cost” which makes it worth more the sooner it is
received. Simply put, the time value of money demonstrates that receiving the
same amount today is better than receiving the same amount in the future; for
the reason that the value of money can potentially grow over a given period of
time. It has what we call the compound interest which makes it more valuable in
the present than the future. The money a person may have now might double or
triple in the future but the total future value may still vary depending on country’s
economic status and how will that person invest or manage it. Below, I will cite
some examples to better explain “the time value of money”.
Example #1: My father offered me Php 1,000 now or Php 1,100 in four
years. Do you think receiving the former will make it more valuable than the
latter? The answer is “YES” but it will also depend on how I will manage it. By
receiving Php 1,000 now then investing it at a 5% annual interest and reinvest for
the next four years, I can gain a total amount of Php 1,200. Comparing it to the
original value and to the latter it is evident that the value has increased which
makes it more worthy. Its difference is known as the time value of money.
Example #2: The scenario above is just the same, but the difference is
that I will invest it at 2% annual interest and reinvest it for the next four years. Do
you think receiving the former will make it more valuable than the latter? The
answer is “NO”. If I opt to receive the Php 1,000 now and invest it at 2% annual
interest in next four years, I can only gain amount of Php 1,080 which is lower
 Polytechnic University of the Philippines
College of Business Administration
Department of Marketing Management

compared to the Php 1,100 in four years. Therefore, in this scenario it is better to
choose the latter than the former.
For the examples above, very important to familiarize is the main formula
of the “time value of money” which is PV = FV/(1+r) wherein PV = present time
value, FV = future value, and r = rate of interest. By familiarizing it and its whole
concept, a person will be able to make the best decision and option on what to
do regarding with his/her money
In conclusion, timing is very important in this concept, as well as
understanding the investment process, and analyzing economic factors (inflation,
deflation, interest rates, tax rates, etc.) that can affect the value of money.
2. Discuss the advantage and disadvantage of GMO
Genetically modified organisms (GMOs) or transgenic organisms are
organisms that have had their characteristics changed through the modification
of their DNA. Common examples of GMO’s are genetically modified crops used
in agriculture and genetically modified organisms used in medical research.
Below, I will cite some advantages and disadvantages of GMO especially in
connection with agriculture which is the subject’s focal point along with a brief
explanation for each.

Advantages of Genetically Modified Organisms:

 GMO crops can be tailored to provide better health benefits
- Through the use of GMO, food can be modified so that they can
provide a complete nutritional profile. Multiple vitamins and
minerals can be built into crops as they grown by adjusting genetic
profile of the plant.
 Possibility of an increased shelf life
- They can be engineered to last longer once harvested, which
extends the life of the product.
 GMO crops can conserve energy, soil, and water resources
 Polytechnic University of the Philippines
College of Business Administration
Department of Marketing Management

- This allows the food distribution networks to make less of an impact

on the environment.
 It can save core crops from extinction
- By practicing GMO, it can save many organisms from extinction.
For example, the naval orange that was a clone of one original tree
that was grafted to create additional trees.
 It can eliminate food allergies or intolerance issues
- The future food of science in the world of GMOs could make it
possible for people with food allergies or intolerance issues to be
able to eat foods thanks to GMO.
 Positive environmental impact
- GMO crops require fewer in-field operations which mean fewer
passes over the field are required. That will reduce the amount of
carbon dioxide and greenhouse gases.
 GMO crop uses less water
- The amount of irrigation water required for agricultural products are
decreased thanks to GMO. For cotton fields the amount of irrigation
water decreased by 75 percent while soybeans, rice, and potatoes
are decreased by 38 percent.

Disadvantages of Genetically Modified Organisms

 FDA does not require GMO labeling

- There is currently no national level labeling requirements for foods
that have GMO labeling.
 There may be an increased risk of allergies or food intolerance
- Some GMO foods have found impact on human allergies and
digestive intolerance. In connection with this is the animal testing
that is highly controversial.
 GMOs create super bugs
 Polytechnic University of the Philippines
College of Business Administration
Department of Marketing Management

- As pesticides are applied to insects that provide a threat to crops, a

few of them tend to survive the application. Each subsequent
generation becomes more resilient to pesticide.
 GMO foods may help to create antibiotic resistance.
- One of the ways that crops are modified to be more resilient to
disease is to artificially place antibiotic genes within the DNA of the
crops. With that, it was found that continuing exposure may lead to
disease resistance.
 Genetic engineering doesn’t solve everything
- Some complications may be found on GMO products but the
scientists are trying their best to make it harmless to human.

As an individual understanding this kind of topic is important to better

contribute to the society. The knowledge and findings that can be gain
here will be useful for future references.

3. What is opportunity cost.

Scarcity is one of the basic economic problems that we are facing up until
today. The scarce resources forced us to make choices and this is where the
concept of opportunity cost comes up. Opportunity cost is a concept in which it
depicts the value a person could have received but passed up in pursuit of
another option. Simply put, it is the benefits an individual or group of people
misses out when choosing one alternative over another. Opportunity cost shows
that when making a choice, there is a certain value we are placing on that
specific choice which concludes to the point that “every choice has a different
degree of value to an individual”. By understanding this whole concept, it will be
easier for an individual to pinpoint what are the missed opportunities that could
be a better investment over another which will lead to better decision making in
the future. This concept is also used in determining if one can benefit from
trading with one another which is very beneficial especially on the part of
 Polytechnic University of the Philippines
College of Business Administration
Department of Marketing Management

economists and business minded people. Below, I will cite some example to
better explain the concept of opportunity cost.
Example #1: I decided to review my notes to become prepared for my
upcoming examination instead of watching k-drama. The opportunity cost was
watching k-drama.
Example #2: I decided to invest my money instead of buying a new phone.
The opportunity cost was buying new phone.
Example #3: Assuming that it is on the past. Person A and B specializes
on producing agricultural products (bananas and corn) and marine farming
(catfish). They are both having a hard time managing their jobs. If they trade
their products instead of trying to handle two jobs at the same time they will be
able to get better results and gain from their specialization. In this scenario the
opportunity cost is giving up on handling two jobs at the same time which
resulted on better position for both persons.
For most complex scenarios, they are using the formula of opportunity
cost which is Opportunity Cost = Return on Most Profitable Investment Choice –
Return on Investment Chosen to Pursue.
In conclusion, the concept of opportunity cost is very helpful especially
when choosing the best possible option and making an appropriate decision. In
the business world, understanding the concept of opportunity cost is like a step
ahead of competition. An advantage in which it helps an individual to choose
what is to risk and not to.