An engineer has been offered an investment opportunity that will require a cash outlay of $40,000 now for a cash inflow of $3500 for each year of investment. However, she must state now the number of years she plans to retain the investment. Additionally, if the investment is retained for 6 years, a lump-sum amount of $36,000 will be returned to her; after 10 years, the lump-sum return is anticipated to be $49,000, and after 15 years, it is estimated to be $55,000. Money is currently worth 10% per year. (a) Is the decision sensitive to the retention period? If so, what investment period is best? (b) Write the format of the spreadsheet function that will display the correct PW values.
An engineer has been offered an investment opportunity
that will require a cash outlay of
$40,000 now for a
year of investment. However, she must state now
the number of years she plans to retain the investment.
Additionally, if the investment is retained
for 6 years, a lump-sum amount of $36,000 will
be returned to her; after 10 years, the lump-sum
return is anticipated to be $49,000, and after
15 years, it is estimated to be $55,000. Money is
currently worth 10% per year. (a) Is the decision
sensitive to the retention period? If so, what investment
period is best? (b) Write the format of
the spreadsheet function that will display the
correct PW values.
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