A Final Requirement in BMATH2€¦ · (A Final Requirement in BMATH2: Mathematics of Investment)...
Transcript of A Final Requirement in BMATH2€¦ · (A Final Requirement in BMATH2: Mathematics of Investment)...
(A Final Requirement in BMATH2: Mathematics of Investment)
Group: G Group Leader: CUNANAN, Patricia Marie
Group Members
BASCO, Mary Joy DE VILLA, Kier Lawrence LAGMAN, Maria Isabel MOSTEIRO, Bianca Denise
Course and Section: 2B‐BSBA Date of Submission: April 6, 2016 Date of Presentation: April 8, 2016
Professor: Mr. Migo M. Mendoza
Grade:
2
Business’ Profile:
Company Name: Globe Telecom
Company Description:
GlobeTM is a leading telecommunications company in the Philippines. Our mission is to inspire and enrich lives through communications by way of our vision of having the happiest customers.
Through our renewed commitment to "enrich lives through ease and relevance," our goal is to enrich everyday communications by simplifying and removing obstacles in communication technology so that we bring our customers closer to what matters to them most.
Our Vision: Happiest customers, employees and shareholders.
Our Mission: We create a wonderful world for people, businesses and the nation.
Core Values:
We put our customers first. Our people make the difference. We act with integrity. We care like an owner. We keep things simple. To us, it's be fast or be last.
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Client’s Profile:
Client Name: Ms. Annabelle Lat
Client’s Description:
19 years old
Female
Student at College of Saint Benilde‐Antipolo Campus
Business Administration student
VP for External Affairs
Completed a contract with Globe Telecom
Reasons for being a tech savvy:
Technology is the fastest growing field right now and there is no sign of stopping anytime soon.
Being knowledgeable in this field. Everything you
learn will come handy at some point in your life. Becoming an expert. Something technology‐related
interests and enjoys me the most. To be more productive and efficient. To stay updated. To get down to school works
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ANNUITY AND AMORTIZATION SCHEDULE (A Final Requirement in BMATH2: Mathematics of Investment)
I. STATEMENT OF THE PROBLEM
A teenager is a number one tech savvy in her class. Whenever there’s a new iPhone release in the market she wants to get rid of her iPhone and ensure herself to get the newest one. Recently, the Apple company released its iPhone 6s Plus and she is very eager to get a new one right away. What do you think is the best option you could provide to this type of client and in what payment scheme?
II. OBJECTIVES This business report aims to: provide options to solve the client’s problem; provide the appropriate payment scheme possible not just by
the client but of all tech savvies based on their capacities; and provide an amortization schedule for the client to know the total
interest paid and to supply the appropriate data if the client plans to pay the plan early.
III. METHODOLOGY
1. Client’s Concerns
A. Client would like to get the newest iPhone whenever released. Also, the client wants to know what the best payment scheme available based on the client’s capabilities.
2. Resolutions
A. Client would like to get the newest iPhone whenever released. Also the
client wants to know the best payment scheme available based on the client’s capabilities.
It is given that the client is a tech savvy that is why she wants to buy the newest iPhone products released. After reviewing her situation, our company would like to recommend that the client’s payment scheme will be calculated with ordinary annuity. And also,
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for the convenience of the client, we will be providing an amortization schedule of her plan.
a. Definition of Payment Scheme
Annuity is a series of payments made at equal intervals of
time. There are three types of Annuities: Annuity Certain, Perpetuity, and Contingent Annuity. For our client, we will use Ordinary Annuity that is classified under Annuity Certain. Aside from Ordinary Annuity, under Annuity Certain are Annuity Due and Deferred Annuity. Ordinary Annuity means that payments are made at the end of each rent period, which is perfect for our client.
We will also provide an amortization schedule so that the
client will know the periods of payments she will make. The amortization schedule will be made for the client to know the total interest paid and the data if the client wants to pay the plan early.
Now, the computation will show the client what her monthly
payment will be.
b. Computation
It is given that the amount of an iPhone 6s plus (64 GB) is Php 43,990.00, now we have to deduct 50% or 40% of the price for the cash‐out. The remaining balance will be the present value. The company will also be asking for the cash‐out, 15% of the iPhone if the client wants to trade‐in her phone, given if she qualified the requirements given. The company also gave a nominal rate of 30% for the prepaid account and 40% for the postpaid and trade‐in accounts compounded monthly. It is constant that the contracts will have a span of 2 years.
Case I. On prepaid account, the client will only be paying for the phone. Our managers have decided to give the client an interest rate of 30%
Given: Cash Value = Php 43, 990.00 (64GB) DP = Php 43,990.00 x 50% = Php 21,995.00 An = Php 21,995.00 t = 2 years j = 30% or 0.30 m = 12 Rn = ?
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i = j/m = 0.30/12 = 0.025 n = tm = (2) (12) = 24
Amortization Schedule (CASE I)
Period OPBI IDEI TPEI RPEI
1 Php21,995.000 Php549.875 Php1,229.800 Php679.925
2 Php21,315.075 Php532.877 Php1,229.800 Php696.923
3 Php20,618.152 Php515.454 Php1,229.800 Php714.346
4 Php19,903.806 Php497.595 Php1,229.800 Php732.205
5 Php19,171.601 Php479.290 Php1,229.800 Php750.510
6 Php18,421.091 Php460.527 Php1,229.800 Php769.273
7 Php17,651.818 Php441.295 Php1,229.800 Php788.505
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8 Php16,863.314 Php421.583 Php1,229.800 Php808.217
9 Php16,055.096 Php401.377 Php1,229.800 Php828.423
10 Php15,226.674 Php380.667 Php1,229.800 Php849.133
11 Php14,377.541 Php359.439 Php1,229.800 Php870.361
12 Php13,507.179 Php337.679 Php1,229.800 Php892.121
13 Php12,615.059 Php315.376 Php1,229.800 Php914.424
14 Php11,700.635 Php292.516 Php1,229.800 Php937.284
15 Php10,763.351 Php269.084 Php1,229.800 Php960.716
16 Php9,802.635 Php245.066 Php1,229.800 Php984.734
17 Php8,817.901 Php220.448 Php1,229.800 Php1,009.352
18 Php7,808.548 Php195.214 Php1,229.800 Php1,034.586
19 Php6,773.962 Php169.349 Php1,229.800 Php1,060.451
20 Php5,713.511 Php142.838 Php1,229.800 Php1,086.962
21 Php4,626.549 Php115.664 Php1,229.800 Php1,114.136
22 Php3,512.412 Php87.810 Php1,229.800 Php1,141.990
23 Php2,370.423 Php59.261 Php1,229.800 Php1,170.539
24 Php1,199.883 Php29.997 Php1,229.800 Php1,199.803
TOTAL Php7,520.280 Php29,515.200 Php21,994.920
Case II. On postpaid account, the client will be paying for the phone, and the monthly payment of the postpaid plan. The client will have a 40% cash‐out upon payment. The agreement will cover a minimum of 2‐year contract that is renewable and a 40% nominal rate compounded monthly. The client’s plan includes the following:
‐ Unlimited calls and text to Globe/TM
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‐ Unlitext all net ‐ Surf more (10GB data allowance) ‐ Free 24 months Instagram ‐ Free 24 months Facebook ‐ Free 24 months Viber ‐ Free 3 months Spotify Premium ‐ Free 3 months HOOQ ‐ Free shipping
Given: Cash Value = Php 43,990.00 DP = Php 43,990.00 x 40% = Php 17,596.00 An = Php 43,990.00 ‐ Php 17,596.00 = Php 26,394.00 t = 2 years j = 40% or 0.40 m = 12 Rn = ? i = j/m = 0.40/12 = 0.033333333 n = tm = (2) (12) = 24
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Amortization Schedule (CASE II)
Period OPBI IDEI TPEI RPEI 1 Php26,394.000 Php879.800 Php1,614.99 Php735.190
2 Php25,658.810 Php855.294 Php1,614.99 Php759.696
3 Php24,899.114 Php829.970 Php1,614.99 Php785.020
4 Php24,114.094 Php803.803 Php1,614.99 Php811.187
5 Php23,302.907 Php776.764 Php1,614.99 Php838.226
6 Php22,464.681 Php748.823 Php1,614.99 Php866.167
7 Php21,598.513 Php719.950 Php1,614.99 Php895.040
8 Php20,703.474 Php690.116 Php1,614.99 Php924.874
9 Php19,778.600 Php659.287 Php1,614.99 Php955.703
10 Php18,822.896 Php627.430 Php1,614.99 Php987.560
11 Php17,835.336 Php594.511 Php1,614.99 Php1,020.479
12 Php16,814.857 Php560.495 Php1,614.99 Php1,054.495
13 Php15,760.363 Php525.345 Php1,614.99 Php1,089.645
14 Php14,670.718 Php489.024 Php1,614.99 Php1,125.966
15 Php13,544.752 Php451.492 Php1,614.99 Php1,163.498
16 Php12,381.254 Php412.708 Php1,614.99 Php1,202.282
17 Php11,178.972 Php372.632 Php1,614.99 Php1,242.358
18 Php9,936.615 Php331.220 Php1,614.99 Php1,283.770
19 Php8,652.845 Php288.428 Php1,614.99 Php1,326.562
20 Php7,326.283 Php244.209 Php1,614.99 Php1,370.781
21 Php5,955.503 Php198.517 Php1,614.99 Php1,416.473
22 Php4,539.029 Php151.301 Php1,614.99 Php1,463.689
23 Php3,075.340 Php102.511 Php1,614.99 Php1,512.479
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24 Php1,562.862 Php52.095 Php1,614.99 Php1,562.895
TOTAL Php12,365.727 Php38,759.760 Php26,394.033
Case III. Client’s phone will be trade in provided that: ‐ The phone came from us (Globe), meaning it should be
globe‐locked. ‐ There is still an existing contract with the same
amount of plan ‐ The client must have a good record and must not miss
her monthly payment ‐ The client must consume the contract for at least 2
years or 24 months ‐ The phone is in good quality (no scratches and dents) ‐ The phone must not be too outdated ‐ The client must be a postpaid plan holder
All the conditions above is strictly observed. The same formula will be used as with a postpaid plan holder. If the client wants to trade her phone, the amount paid (monthly payments) during the entire contract except their first cash‐out will be used as her cash‐out payment for the trade‐in; meaning, the client will only be paying for her monthly plan and 15% of the price of the iPhone 6s Plus. Lastly, considering the trade‐in as a new contract, meaning another 2‐year contract will be observed, both the client and the company will still observe the terms and conditions for postpaid plans.
For the computation below, we will be using the price of the iPhone 5s (Php 39,600.00; 32GB) upon launching, given that the client is tech savvy so we assume that she is always up‐to‐date to new gadgets, to show you how much is the client’s cash‐out once they wanted to trade‐in. Given: Cash Value = Php 39,600.00 (32GB of iPhone 5s) DP = Php 39,600 x 40% = Php 15,840.00 An = Php 39,600.00 ‐ Php 16,840.00 = Php 23,760.00 t = 2 years j = 40% or 0.40 m = 12 Rn = ?
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i = j/m = 0.40/12 = 0.033333333 n = tm = (2) (12) = 24
Amortization Schedule (CASE III)
Period OPBI IDEI TPEI RPEI 1 Php23,760.000 Php792.000 Php1,453.820 Php661.820
2 Php23,098.180 Php769.939 Php1,453.820 Php683.881
3 Php22,414.299 Php747.143 Php1,453.820 Php706.677
4 Php21,707.623 Php723.587 Php1,453.820 Php730.233
5 Php20,977.390 Php699.246 Php1,453.820 Php754.574
6 Php20,222.816 Php674.094 Php1,453.820 Php779.726
7 Php19,443.090 Php648.103 Php1,453.820 Php805.717
8 Php18,637.373 Php621.246 Php1,453.820 Php832.574
9 Php17,804.799 Php593.493 Php1,453.820 Php860.327
10 Php16,944.472 Php564.816 Php1,453.820 Php889.004
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11 Php16,055.468 Php535.182 Php1,453.820 Php918.638
12 Php15,136.830 Php504.561 Php1,453.820 Php949.259
13 Php14,187.571 Php472.919 Php1,453.820 Php980.901
14 Php13,206.670 Php440.222 Php1,453.820 Php1,013.598
15 Php12,193.073 Php406.436 Php1,453.820 Php1,047.384
16 Php11,145.688 Php371.523 Php1,453.820 Php1,082.297
17 Php10,063.391 Php335.446 Php1,453.820 Php1,118.374
18 Php8,945.018 Php298.167 Php1,453.820 Php1,155.653
19 Php7,789.365 Php259.645 Php1,453.820 Php1,194.175
20 Php6,595.191 Php219.840 Php1,453.820 Php1,233.980
21 Php5,361.210 Php178.707 Php1,453.820 Php1,275.113
22 Php4,086.097 Php136.203 Php1,453.820 Php1,317.617
23 Php2,768.480 Php92.283 Php1,453.820 Php1,361.537
24 Php1,406.943 Php46.898 Php1,453.820 Php1,406.922
TOTAL Php11,131.701 Php34,891.680 Php23,759.979
The table and computation above shows the computation of the client’s previous plan or payment scheme for her iPhone 5s. And, as for the table above, we could compute for the cash‐out of the client if she wants to trade‐in. We could compute the new cash‐out as:
New Cash‐out = (Rn x Period) + 15% of iPhone 6s Plus For example, New Cash‐out = (Php 1,453.82 x 24) + (Php 43,990.00 x 0.15)
= Php 34,891.680 + Php 6,598.50
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= Php 41,490.18; The Php34,891.68 is not paid upon the “trade‐in” transaction, because it is already paid during the contract of the client’s last phone. Hence, the client will only be paying for the 15% of iPhone 6s Plus which is Php 6,598.50 and the monthly payment of Php 1,614.99 as shown in CASE II.
IV. CONCLUSION Case I. Prepaid Plan The company had decided to give the client a 50% cash‐out, meaning she needs to pay Php 21,995.00 at the beginning of the transaction and as for the remaining balance, it will be computed using Ordinary Annuity. The client will also be given a 30% nominal rate compounded monthly and that the contract must be accomplished within 2 years. If the client chooses this plan, then the monthly payment will yield to Php29,515.20. Thus the company will have a minimum profit of Php 7,520.20. Case II. Postpaid Plan At this plan, the company decided to give the client a 40% cash‐out, the client will pay Php 17,596.00, with a nominal rate of 40% to ensure the company’s income the contact has a span of 2 years also, but it is renewable. If the client wants to avail the plan after 2 years, she can do so. She have a privilege of having promos and subscriptions. The monthly payment of this plan will yield to Php38,759.76 at the end of 2 years. Thus, the company will have an income of Php 12,365.76. Case III. Trade‐In
With this plan, the client will not pay for the whole cash‐out of iPhone 6s Plus. Yet, she will be paying for the monthly payment of iPhone 6s Plus as shown in CASE II plus 15% of the amount of iPhone 6s Plus. The cash‐out will be coming from her previous contract which is from iPhone 5s, as we assume that it is her current phone and plan. So basically, the client will pay Php 6,598.50 upon transaction and she will be surrendering her phone.
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The company’s profit will come from the monthly payment of her plan
and from the surrendered phone. This will only be an option if her phone qualifies all the requirements given. The phone will be inspected by a Globe personnel.
V. RECOMMENDATION
Since Annabelle is a tech savvy and she wants to get rid of her current phone quickly every time there’s newly released iPhone in the market, the best plan for her is CASE III where she could trade‐in her current iPhone into the newest model of the iPhone. It would be easier for her to dispose her current iPhone without the hassle of reselling it.
She just need to make sure that her current phone will pass the
qualifications of Globe to be able to trade it to the newly released iPhone that she wanted. She will save tons of money if she avails that plan since she wants to be updated every time. Availing that plan would be the best deal for her and for the Globe as well because Globe can resell their second hand phones into a much cheaper price.
If her phone didn’t pass the requirements, then we would suggest that she would use CASE II. This is the best plan for her because she is a college student so this means that she needed to text or calls somebody from time to time. This may be her parents, friends, boyfriends, group mates, professors, etc. Or if she needed to surf the internet. With our plan she doesn’t need to worry of losing load or data. This is perfect for her since she is a business administration student and an officer for their organization that needs to contact other schools as well.
The client will surely benefit from the plan that she will select. She will
have selected freebies and sure guarantee that there is a warranty of all the products that's in her plan. We ensure that our plans have fast connection. Like any clients, she may contact us for any questions, clarifications, or recommendations for her plan.