A manufacturing firm has decided to plan for the purchase of a pickup truck several years from now. At that time, the company estimates that they will need $72,000 and has decided to set aside a uniform amount of money at the end of every month to save up for this need. It believes it is possible to set aside $1,180 per month at 9% compounded monthly interest. It wishes to know how long it will take to save $72,000 and how sensitive this result is to a 5% and 10% increase or decrease in both the amount saved per month and in the interest rate., a) As a base case, determine how many months it will take to save $72,000. b) Construct a sensitivity graph to illustrate how the number of months change as a function of % change. c) This plan is most sensitive to which variable?
A manufacturing firm has decided to plan for the purchase of a pickup truck several years from now. At that time, the company estimates that they will need $72,000 and has decided to set aside a uniform amount of money at the end of every month to save up for this need. It believes it is possible to set aside $1,180 per month at 9% compounded monthly interest. It wishes to know how long it will take to save $72,000 and how sensitive this result is to a 5% and 10% increase or decrease in both the amount saved per month and in the interest rate., a) As a base case, determine how many months it will take to save $72,000. b) Construct a sensitivity graph to illustrate how the number of months change as a function of % change. c) This plan is most sensitive to which variable?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 30P
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