Imagine you are the CEO and owner of a firm. One day, you have decided that you want to take a break to travel the world and decided to entrust your wealth to three of your most trusted managers. You told them that when you return, you will choose who among them will be the next CFO.
The wealth shall be given to each manager based on the CFO's assessment of their talents. To the first manager, you entrusted P500,000. To the second manager, believing that manager can make wise decisions as well, you also gave an amount P500,000. Finally, you called on the third manager and gave him P500,000. You then went on your journey and told the managers that you will be back after circumnavigating the world.
Since the first manager was a very smart person, he decided to invest the P500,000 given to him. He was very please that he was quoted a long-term investment for 5 years at 8% per annum compounded annually, and decided to invest the money in that institution. The second manager saw what the first manager did and also decided to invest the money. However, when given the choice by the investment firm, he did not understand the difference between simple and compound interest. In the end, he accepted the quote at 8% per annum simple interest. The third manager saw them and thought that they were too much of a risk-taker and decided just to keep the money locked in a vault at his home.
When you return from your trip, which manager will you choose as the CFO of your business
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Answer:
Imagine you are the CEO and owner of a firm. One day, you have decided that you want to take a break to travel the world and decided to entrust your wealth to three of your most trusted managers. You told them that when you return, you will choose who among them will be the next CFO.
The wealth shall be given to each manager based on the CFO's assessment of their talents. To the first manager, you entrusted P500,000. To the second manager, believing that manager can make wise decisions as well, you also gave an amount P500,000. Finally, you called on the third manager and gave him P500,000. You then went on your journey and told the managers that you will be back after circumnavigating the world.
Since the first manager was a very smart person, he decided to invest the P500,000 given to him. He was very please that he was quoted a long-term investment for 5 years at 8% per annum compounded annually, and decided to invest the money in that institution. The second manager saw what the first manager did and also decided to invest the money. However, when given the choice by the investment firm, he did not understand the difference between simple and compound interest. In the end, he accepted the quote at 8% per annum simple interest. The third manager saw them and thought that they were too much of a risk-taker and decided just to keep the money locked in a vault at his home.
When you return from your trip, which manager will you choose as the CFO of your business