FIN5FMA - FINANCIAL MANAGEMENT - ASSIGNMENT

INTRODUCTION & GROUP INDENTIFACTION

ENTER THE STUDENT ID NUMBERS

NAME STUDENT'S ID
Nguyễn Thái Hà 1704010029
Nguyễn Như Hằng 1704010038
Nguyễn Thùy Liên 1704010060
Bùi Phương Anh 1704040002

The set of questions and its input values in the assignment depend on the students' IDs, make sure you h
corresponding information in full and correctly before proceeding to "AssignmentModel" sheet.

INSTRUCTIONS
Please read carefully before continuing

1 Provide names and IDs of students who have contributed to this assignment in the above section.
The group is the same as the tutorial group.

2 There is a total of 07 problems; each contains several components such as situation, fact, question
- Situation provides background information and assumption(s) of the problem.
- Fact provides numerical inputs and details of the variables.
- Question is the requirement of the assignment, specifically to each problem.
- Answer is the structured model designed to solve the problem/ question. Fill all the empty white
*You are not able to modify this Excel file and you have to follow the logical structure in each "Answ
*You are allowed to use Excel formulas or/and functions to fill in the empty white cells. If you are n
simply entering values (numbers) into these cells.

3 For each numerical answer, two decimal numbers are required.

4 This assignment is due at 17:00pm on the Sunday, 21st April 2019.

Late submission will receive a mark of "0".
Please submit your assignment by sending email to the following email address: philong.fmt@gma
Each group submits ONLY one assignment attached to the email. Only Excel file is accepted.
Subject of the submission email: FIN5FMA. You will receive a confirmation email if the email subje
After two days after submission, an email will be sent to you to notify the results of the assignmen
 Note that the result email will be sent to each group at different time.

5 Mark of the assignment is allocated as follows Raw points

Problem 1 3
Problem 2 4
Problem 3 3
Problem 4 3
Problem 5 7
Problem 6 9
Problem 7 11
Marking note: 40
Only correct answers will receive credit in problems 1-4.
Partial marks might be given to answers in problems 5, 6, and 7.

6 If the group has any inquiries relating to marks, reply to the result email with no later than 25th Ap
SSIGNMENT
NTIFACTION

ts' IDs, make sure you have provided

Model" sheet.

nt in the above section.

situation, fact, question, and answer.

. Fill all the empty white cells.

al structure in each "Answer" component.
y white cells. If you are not familiar with them

dress: philong.fmt@gmail.com
el file is accepted.
email if the email subject is correct.
results of the assignment.
 Standard point/10
0.75
1.00
0.75
0.75
1.75
2.25
2.75
10

th no later than 25th April 2019.

 PROBLEM 1
You want to earn some extra money for your savings and start putting it in a savings account o
The bank pays the interest at the end of the savings term.

Question
Calculate the total amount that you will receive from your account at the end of saving period

Facts
2 The amount of money you have deposited $ 127.00
3 The annual interest rate offered by the bank 5.00%
4 Number of years (term) of the savings 12.00

Answer
Principal received at the end of saving period $ 127.00
Dollar interest received at the end of saving period $ 76.20
Total amount received at the end of saving period $ 203.20

PROBLEM 2
Suppose that a bank pays compound interest for savings account. You want to deposit some m

Question
Calculate the total amount that you will receive from the account.

Fact
5 The amount of money you have deposited $ 593.00
6 The annual interest rate offered by the bank 10.00%
7 Number of years (term) of the savings 11.00
8 Frequency of compounding per year Semi-annually

Answer
The principal of deposit $ 593.00
Periodic interest rate 5.00%
Number of periods 22.00
Total amount to be received at the end of savings period $ 1,734.68
 PROBLEM 3
You are considering the two borrowing alternatives: borrowing through a credit card or from

Question
Calculate the Effective Annual Rate for each of the borrowing.
Who would you take the loan from?

Fact Credit card

9 APR 9.00%
### Compounding frequency Semi-annually
### Terms of borrowing (years) 11.00

Answer
Effective annual rate 9.20%
You will get the loan from Credit card

PROBLEM 4
Find the present value of the investments knowing that the cash flow occurs at the end of ea
If both investments require the same amount of initial payment, which one is more preferabl

Question
Calculate the present value of investment A and B.
Which investment is more preferable?

Fact Investment A
Cash flow at the end of year 1 $ -
Cash flow at the end of year 2 $ -
Cash flow at the end of year 3 $ 50.00
Cash flow at the end of year 4 $ 60.00
Cash flow at the end of year 5 $ 70.00
Cash flow at the end of year 6 $ -
Cash flow at the end of year 7 $ -
Cash flow at the end of year 8 $ -
Cash flow at the end of year 9 $ 100.00
Cash flow at the end of year 10 $ 2,500.00
### Annual discount rate 2.00%

Answer Investment A
Total discounted cash flow $ 2,300.49

The more preferable investment is Investment A

PROBLEM 5
Set up a loan amortisation schedule for the loan as below.
First payment occurs at the end of the first period for Part A, immediately for Part B

Question
PART A Set up a loan amortization schedule for an mortgage and answer the following questions

Facts
### Borrowing amount $ 5,000.00
### Term (years) of borrowing 3.00
### Number of payment periods per year Quarterly
### Annual interest rate 4.00%

Answer
Value of each payment $444.24

The interest payment for the second period $46.06

The principal repayment for the third period $402.16

Question
PART B
Suppose that you get a mortgage of $100,000 to buy your dreamed house. The loan is for 10 year, int
### Suppose that you plan to pay off the loan after 8 years.
How much you are liable to pay assuming that you will be charged no penalty for early cancellation?

Answer
The borrowed amount $ 100,000.00
Annual interest rate 10.00%
 Term of the loan (year) 10
Compounding periods per year 12
Number of periods 120
Periodic payment $1,321.51
The amount liable to pay at cancellation year $87,089.48

PROBLEM 6
Truong would like to set up an account to provide for his higher education. He will do his master degr
His master degree education will last for 2 years and requires tuition fee payments to be paid every 6
The tuition fee will be indexed (adjusted) against expected inflation, every six months.

Question
PART A He want to set up a financial plan for his dream: How much must he deposit every six months
Assume he deposits his money every six months, starting immediately.
Facts
### The first tuition fee payment $ 18,000.00
### Expected annual inflation rate (constant) 2.70%
### The annual interest rate for the savings account (constant) 4.00%
Compounding frequency Semi-annually

Answer
Step 1 Total money he must have in the account at the first semester

Step 2 Amount of each deposit

Question
PART B If the interest is compounded semi-annually but he wants to deposit money in the bank acco
Calculate the monthly deposit, assume that interest will be earned proportionally during the

Answer
Step 1 Total money he must have in the account at the first semester

Step 2 Periodic interest rate

Step 3 Amount of each deposit

 PROBLEM 7
You are following a company and as such you are trying to estimate value of common stock o
The following information you have collected and will be used in the estimation.
The company has just paid a dividend of $1.2 per share, analysts expect that the company wi
After the two years the dividends are expected to return to its current level for 3 years, after w
During the estimation period you expect that risk profile of the company will change.
### Currently the required rate of return is 10.00%
### After which, the required rate of return is 12.00%

Question
Estimate the intrinsic value of the stock.

Answer
Cash flow Rate of return
Current dividend Discount rate used to estimate stock price in ye
Dividend in year 1 Discount rate used to estimate current stock pri
Dividend in year 2
Dividend in year 3
Dividend in year 4
Dividend in year 5

Stock price at the end of year 05

Stock value at the current time

g it in a savings account of a commercial bank.

the end of saving period.

u want to deposit some money in a savings account.

gh a credit card or from a friend.

Friend
8.8500%
Daily
11.00

9.25%

occurs at the end of each year.

ch one is more preferable?

Investment B
$ 50.00
$ 60.00
$ 70.00
$ -
$ -
$ -
$ 100.00
$ 2,000.00
$ -
$ 10.00
 Investment B
$ 1,974.89

ately for Part B

following questions

he loan is for 10 year, interest rate of 10% requiring monthly payment.

y for early cancellation?

e will do his master degree in five years and pays the tuition fee by himself.
ments to be paid every 6 months at the beginning of each semester.

deposit every six months to accomplish his higher education dream?

$ 18,000.00

$ 17,887.15

money in the bank account every month?

roportionally during the holding periods.

$ 18,000.00

0.33%

$ 17,880.77
alue of common stock of the company.
estimation.
ect that the company will not pay dividend in the following two years.
t level for 3 years, after which it will grow at the constant rate of 5%.
any will change.

stimate stock price in year 5

stimate current stock price