UNIDAD EDUCATIVA SAINT DOMINIC SCHOOL
ÁREA: SOCIALES
ASIGNATURA: BUSINESS AND MANAGEMENT
STUDENT'S NAME: KAREN ALBÁN
AÑO LECTIVO 2021-2022
This investigation aims to analyse the following question: Should I invest in a bank or become an
influencer?
Karen currently has $1000 of which she has two options: invest in a bank policy or invest in her dream of
becoming an influencer. Karen wants to know which of the two options will bring her more profit at the
end of the month.
Banco Pichincha
Term of more than 361 days (starting from $1000) – 6,90%
(BANCO PICHINCHA, 2022)
Term of more than 750 days (starting from $1000) – 5.70%
(PRODUBANCO, 2022)
Term of 365 days (starting from $1000) – 6.25%
(Banco Pacifico, 2022)
Starting from $5000 – 6.50%
(Banco ProCredit, 2022)
Produbanco
Banco Pacífico
Banco Procredit
Table 1. Investment values and interest rates of the different banks in Ecuador.
Year
Opening balance
Cash inflows
allowance
part time job
grandma's money
debtors
savings
Total cash inflows
Cash outflows
leisure activities
university
payment
Total cash
outflows
Net cashflow
Closing balance
2023
0
2024
$350
2025
$500
2026
$650
2027
$700
$200
$2.550
$100
$1.069
$100
$4.019
$0
$2.550
$100
$1.143
$100
$3.893
$0
$2.550
$100
$1.222
$100
$3.972
$0
$2.550
$0
$1.306
$100
$3.956
$0
$2.550
$0
$1.396
$100
$4.046
$100
$100
$100
$100
$100
$2.500
$2.500
$2.500
$2.500
$2.500
$2.600
$1.419
$1.419
$2.600
$1.293
$1.643
$2.600
$1.372
$1.872
$2.600
$1.356
$2.006
$2.600
$1.446
$2.146
Table 2. Cash flow if I decide to invest in Banco Pichincha.
Year
Opening balance
2023
1000
2024
$6.475
2025
14.440
2026
24.405
2027
34.880
Cash inflows
allowance
part time job
Facebook income
Youtube income
Instagram income
Total cash inflows
Cash outflows
Leisure activities
new laptop
camera
microphone
Filmora 10
Decorate studio
Total cash outflows
Net cashflow
Closing balance
$50
$2.550
$1.000
$2.500
$1.500
$7.600
$100
$2.550
$1.000
$2.500
$2.000
$8.150
$100
$2.550
$2.500
$3.000
$2.000
$10.150
$100
$2.550
$2.500
$3.000
$2.500
$10.650
$100
$2.550
$2.500
$3.000
$2.500
$10.650
$175
$1.000
$400
$350
$100
$100
$2.125
$5.475
$6.475
$175
$0
$0
$0
$0
$10
$185
$7.965
14.440
$175
$0
$0
$0
$0
$10
$185
$9.965
$24.405
$175
$0
$0
$0
$0
$0
$175
$10.475
$34.880
$175
$0
$0
$0
$0
$0
$175
$10.475
$45.355
Table 3. Cash flow if I decide to become an influencer.
Ob
Cf
PV
NPV
0
-1000
return
7%
1
2
3
$1.419
$1.643 $1.872
$1.327,41 $1.438
$1.532,40
4
5
$2.006
$1.536,10
$2.146
$1.537
$6.370,90
Table 4. Net present value (NPV) if I invest in a bank.
0
Ob
Cf
7%
1
2
3
4
5
$6.475
14.440
$12.636
$34.880
$26.709,4
9
$45.355
$6.057,06
$24.405
$19.977,7
1
-1000
PV
NPV
return
$96.869,3
5
$32.489
Table 5. Net present value (NPV) if I become an influencer.
Figure 1. Decision tree when investing in a bank.
Figure 2. Decision tree when it comes to being an influencer.
Analysis and Discussion
Banco del Pichincha was chosen for the $1,000 investment because it offers the highest interest rate
among its competitors. Banco del Pichincha offers an interest rate of 6.9% per annum, with an initial
amount of $1,000 (what Karen currently owns). (Table 1)
In addition, the bank gives her the following benefits: (BANCO PICHINCHA, 2022)




Put together your investment plan your way.
You do not need to be a Banco Pichincha client.
Receive interest at a preferential rate and in the period of your preference.
Access to a secured credit of equal or lesser value to your investment.
The cash flow if Karen invests in the bank shows what would happen if she invested what she receives
from the bank the following year. For example, in the first year (2023) her debtors will be $1,069, which
she will invest the following year (2024). In this way, her income will increase every year. (Table 2)
In addition, she realized that if she goes at this rate with the same interest rate, she will no longer need
financial help from his parents or relatives in the coming years. As shown in Table 2, by the year 2024
Karen will not need money from her parents and by the year 2026 she will not need money from her
relatives to continue producing income.
On the other hand, the cash flow if Karen becomes an influencer shows that the amounts related to
application payments will have to increase in order to make a profit. In addition, this cash flow chart is
made assuming that in the first year Karen manages to have enough followers to earn income from
social media. (Table 3)
The NPV is to obtain the present value of all future flows, in order to see the profitability of a project.
(Jason, 2022) The net present value (NPV) shows that by investing in the bank for 5 years the net value
will be $6.370,90. (Table 4) This applying an interest rate of 6.9% (7%) every year (5 years). On the other
hand, the net present value if Karen becomes an influencer gives us a total of $96,869.35. (For the 5
years) This is assuming our discount rate is 7%. (Table 5)
The decision tree if Karen invests in a bank, shows that it is more likely that the bank will pay on time
and that Karen will continue to invest each year. Whereas it is less likely that the bank will not pay on
time and Karen will not continue to invest in the bank. Therefore, it seems safer to invest in the bank
since it will give us the money on time with interest at the end of each year and it will increase each year
if Karen continues to invest. (Figure 1)
On the other hand, the decision tree if Karen decides to become an influencer shows that there is little
probability that Karen will obtain more than 10,000 followers in the first year (she will not obtain the
expected income). Whereas it is more likely that Karen will get less than 10,000 followers and the
platform will pay her on time, but not as expected in the cash flow. (Figure 2)
In conclusion, according to the data obtained in the present research, it is concluded that Karen should
invest the $1,000 in the bank. Since, it is more certain that she will obtain the expected money according
to the forecast. In addition, Banco Pichincha gives her benefits such as the flexibility to organize her own
investment or to invest even if she is not a client of the bank. Also, if Karen applies the investment, she
will be more independent since she will not need money from her parents or relatives to generate
income in the coming years. However, the NPV table shows that Karen will receive less NPV, on the
contrary, if she becomes an influencer.
On the other hand, if Karen decides to become an influencer, her chances of success depend on the
number of followers she gains in the first year, and as Table 5 shows, there is little chance that she will
exceed 10,000 followers in the first year. Therefore, it is most likely that Karen will not get the desired
number of followers to generate profits. However, if she manages to get the expected followers, Karen
would get more NPV than if she invested in the bank.
References
BANCO PICHINCHA. (2022). TARIFARIO APERTURA DE CUENTAS, INVERSIONES Y PLANES DE AHORRO
FUTURO. BANCO PICHINCHA. https://www.pichincha.com/portal/Portals/0/Transparencia/tarifariounificado-informativo-agencia-01-12-2022.pdf
PRODUBANCO. (2022). TASAS. PRODUBANCO. https://www.produbanco.com.ec/media/711829/tasasdic-2022.pdf
Banco Pacifico. (2022). Depósitos a plazo. Banco Pacifico.
https://www.bancodelpacifico.com/calculadora-de-depositos
Banco ProCredit. (2022). Tasa de interés y tarifas de servicio. Banco ProCredit.
https://www.bancoprocredit.com.ec/wpcontent/uploads/2022/03/tasa_de_interés_y_tarifas_por_servicios_marzo.pdf
BANCO PICHINCHA. (2022). Armadolar. BANCO PICHINCHA
https://www.pichincha.com/portal/principal/personas/inversiones/armadolar
Jason, F. (2022). Net Present Value (NPV): What It Means and Steps to Calculate It. Investopedia.
https://www.investopedia.com/terms/n/npv.asp