QUESTION 2 (10 MARKS)

1. Owen would like to purchase a house in 3 years. He save RM3,000 every 6 months starting at the end of the first period to provide for that purpose. If money is worth 12% per annum. How much would he have by the time he need to pay the deposit?

(2 marks)

2. Charlotte would like to start up her own food truck business. While doing her business plan, she estimated her dream second hand food truck to cost around RM30,000. If she started saving today a sum of RM4,000 every quarter at 10% compounding rate, will she be able to buy the truck after 2 years?

(3 marks)

3. Violet has just won an Logo Design contest. Suppose that Violet has an opportunity cost of capital of 10% per annum paid semi-annually and he must decide between the following two alternatives of prizes. Which option should Violet choose?

1. Instalment of RM50,000 paid every end of 6 months over a 5 years period.
2. Lump sum of RM500,000 paid 5 years later compounded annually.

(5 marks)