(A Final Requirement in BMATH2: Mathematics of Investment)

Transcription

1 (A Final Requirement in BMATH2: Mathematics of Investment) Group: Group Leader: Group Members Course and Section: G CUNANAN, Patricia Marie BASCO, Mary Joy DE VILLA, Kier Lawrence LAGMAN, Maria Isabel MOSTEIRO, Bianca Denise 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 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. Company Description: Our Vision: Our Mission: 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. Happiest customers, employees and shareholders. 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. 2

3 Client s Profile: Client Name: Client s Description: Ms. Annabelle Lat 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 3

4 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, 4

5 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, (64GB) DP = Php 43, x 50% = Php 21, A n = Php 21, t = 2 years j = 30% or 0.30 m = 12 R n =? 5

6 i = j/m = 0.30/12 = n = tm = (2) (12) = 24 Amortization Schedule (CASE I) Period OPBI IDEI TPEI RPEI 1 Php21, Php Php1, Php Php21, Php Php1, Php Php20, Php Php1, Php Php19, Php Php1, Php Php19, Php Php1, Php Php18, Php Php1, Php Php17, Php Php1, Php

7 8 Php16, Php Php1, Php Php16, Php Php1, Php Php15, Php Php1, Php Php14, Php Php1, Php Php13, Php Php1, Php Php12, Php Php1, Php Php11, Php Php1, Php Php10, Php Php1, Php Php9, Php Php1, Php Php8, Php Php1, Php1, Php7, Php Php1, Php1, Php6, Php Php1, Php1, Php5, Php Php1, Php1, Php4, Php Php1, Php1, Php3, Php Php1, Php1, Php2, Php Php1, Php1, Php1, Php Php1, Php1, TOTAL Php7, Php29, Php21, 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 7

8 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, DP = Php 43, x 40% = Php 17, A n = Php 43, Php 17, = Php 26, t = 2 years j = 40% or 0.40 m = 12 R n =? i = j/m = 0.40/12 = n = tm = (2) (12) = 24 8

9 Amortization Schedule (CASE II) Period OPBI IDEI TPEI RPEI 1 Php26, Php Php1, Php Php25, Php Php1, Php Php24, Php Php1, Php Php24, Php Php1, Php Php23, Php Php1, Php Php22, Php Php1, Php Php21, Php Php1, Php Php20, Php Php1, Php Php19, Php Php1, Php Php18, Php Php1, Php Php17, Php Php1, Php1, Php16, Php Php1, Php1, Php15, Php Php1, Php1, Php14, Php Php1, Php1, Php13, Php Php1, Php1, Php12, Php Php1, Php1, Php11, Php Php1, Php1, Php9, Php Php1, Php1, Php8, Php Php1, Php1, Php7, Php Php1, Php1, Php5, Php Php1, Php1, Php4, Php Php1, Php1, Php3, Php Php1, Php1,

10 24 Php1, Php Php1, Php1, TOTAL Php12, Php38, Php26, 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 cashout 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, (32GB of iphone 5s) DP = Php 39,600 x 40% = Php 15, A n = Php 39, Php 16, = Php 23, t = 2 years j = 40% or 0.40 m = 12 R n =? 10

11 i = j/m = 0.40/12 = n = tm = (2) (12) = 24 Amortization Schedule (CASE III) Period OPBI IDEI TPEI RPEI 1 Php23, Php Php1, Php Php23, Php Php1, Php Php22, Php Php1, Php Php21, Php Php1, Php Php20, Php Php1, Php Php20, Php Php1, Php Php19, Php Php1, Php Php18, Php Php1, Php Php17, Php Php1, Php Php16, Php Php1, Php

12 11 Php16, Php Php1, Php Php15, Php Php1, Php Php14, Php Php1, Php Php13, Php Php1, Php1, Php12, Php Php1, Php1, Php11, Php Php1, Php1, Php10, Php Php1, Php1, Php8, Php Php1, Php1, Php7, Php Php1, Php1, Php6, Php Php1, Php1, Php5, Php Php1, Php1, Php4, Php Php1, Php1, Php2, Php Php1, Php1, Php1, Php Php1, Php1, TOTAL Php11, Php34, Php23, 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 tradein. We could compute the new cash out as: New Cash out = (R n x Period) + 15% of iphone 6s Plus For example, New Cash out = (Php 1, x 24) + (Php 43, x 0.15) = Php 34, Php 6,

13 = Php 41,490.18; The Php34, 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, and the monthly payment of Php 1, 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, 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, Thus the company will have a minimum profit of Php 7, 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, at the end of 2 years. Thus, the company will have an income of Php 12, 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, upon transaction and she will be surrendering her phone. 13

14 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. 14