Cash flows of two offers

Mr. Ocampo’s offer

Php 1,000,000
Php 50,000
Php 50,000

y1 y2 y3 y4 y5
Mr. Cruz offer
Php 50,000 Php 40,000 Php 40,000 Php 40,000 Php 40,000 … Php 40,000

…
y1 yn
 Given: Find the present value.
Mr. Ocampo’s offer
𝐹 1 000 000
P=
Downpayment: Php 50,000 ( 1 + 𝑖) n = (1 + 0.05)5
Future Value: Php 1,000,000
= Php 783,256.17
r= 0.05
n=5
Fair Market Value
t= 5 0.05 FMV = Down payment + Present Value
=
1 = 0.05
m= 1 = 50, 000 + 783, 526.17
= Php 833, 526.17
 Find the present value.
Given:
Mr. Ocampo’s offer

P= R
Downpayment: Php 50,000
Future Value: Php 1,000,000 = 40, 000
m 2
(m2) m 1

R= 40,000 = (1+ ) -1 Php = 705, 572.68

𝟏

t= 5 =(1+)
𝟒
-1 Fair Market Value
r (m ) = 0.05
2 FMV = Down payment + Present Value
m1 = 4 𝑖 = 0.001227223 = 50, 000 + 705, 572.68
m2 = 1
= Php 755, 572.68
n=20
Given: Company A

Future Value= Php 150, 000 at

the end of 3 years.
Future Value = Php 300, 000 at the
end of 5 years.

0.08
𝑖= =0.04
r = 0.08 2

t=5
n = 10
t=3
m=2 n=6
Given: Company A

Present value of Php 150, 000 Present value of Php 300, 000
Future Value= Php 150, 000 at
3 years from now is 5 years from now is
the end of 3 years.
Future Value = Php 300, 000 at the
end of 5 years. P1 = F(1 + )-n P2 = F(1 + )-n
= 150, 000(1 + 0.04 )-6 = 300, 000(1 + 0.04 )-10
0.08
𝑖= =0.04
r = 0.08 2 = 118, 547.18 = 220, 669.25
t=5 Fair Market Value = P1 + P2
n = 10
t=3 = 118, 547.18 + 220, 669.25
m=2 n=6
= Php 321, 216. 43