FEM 3204

FINANCIAL PLANNING IN THE GLOBAL MARKET

PRACTICE 4

SAVING AND INVESTMENT

OBJECTIVE:

  1. To determine the value of saving in the future.
  2. To determine present value for getting the future value.
  3. To identify the time effect and profit rate to the amount that we want in the future.

ACTIVITY:

  1. Students have to analyze a family case and answer the question.

Case:

At the moment Mogana family has RM 5000 in bank saving account. The primary financial goals are to further study for 2 years in master with cost RM 10,000 in the next 5 years, to change a new car with cost RM 20,000 in the next 6 years, to save house deposit valued RM 12,000 in 10 years.

Besides the above budget, Mogana start saving RM 200 every month in the account. The saving accounts give 8% interest compounded annually. Only 60% from this saving is allocated for those financial planning and the balance will be provided for emergency plan.

a)In your opinion why Mogana’s family make investment in that saving account compare to other means.

b)Explain with calculation whether Mogana’s family has made the wise investment to achieve those financial plans.

If not, what your suggestion to Mogana family?

c)What are the factors should be consider ensuring the value of the saving in the future can achieve the wanted value.

Activity 2

Solve the problems below by using the calculation formula with you has learned. You can use the lecture module and revision book to solve the problems.

  1. How much interest you will receive if you are deposited RM300.00 with 6% interest for 27 months.
  1. How much the interest you should pay if you take loan RM670.00 for 8 months with 12% interest.
  1. What is the future value for RM800 with 8% interest after 6 years?
  1. How much the saving if you save RM200 in a bank with 8% interest within 8 years and compounded twist a year.
  1. How much the future value for the yearly saving of RM230 with get 6% interest within 15 years.
  1. How much the present value Ali’s retirement account if he has deposited RM375 a year for 25 years with profit 12% a year.
  1. How much the present value of RM2,200 with profit 15% for 8 years.
  1. To accumulate RM6000 for children education within 10 years, how much you have the parent should save in the saving account if the account can give the profit 12% with it compounded fourth time a year.

Due Date: 23 November 2013

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