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The Not so Green Not so Forever company requires to make a choice between two saving regimes to fund a future expansion of its operations

Accounting

The Not so Green Not so Forever company requires to make a choice between two saving regimes to fund a future expansion of its operations. Given that it has managed to negotiate a nominal interest rate of 3.51%. the company needs to know which of the two scenarios listed below would be the fastest way to save a future value of $2m. Scenario 1: You make quarterly deposits of $25k into a savings account that is compounded monthly. Scenario 2: You make deposits of $45k every six months into a savings account that is compounded bi-annually. A. For Scenario 1 calculate how many years it would take to save the future value of $2m. [7 marks] B. For Scenario 2 calculate how many years it would take to save the future value of $2m. [7 marks] C. Comment on your findings and state which of the two scenarios is the fastest of the savings regimes. [3 marks] D. Management requires fast tracking their expansion program to begin in 10 years time. In addition to the regular savings described in Scenario 1 the company will deposit the following lump sum amounts: $140k at the end of the first year, $180k at the end of the second year and $200k at the end of the third year. You have been asked to determine if the company will achieve their goal of saving a future value of $2m using the scenario 1 savings regime however limited to a ten year time period. [5 marks]

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