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total growth in the investment account increases over time

Two plans have been proposed for accumulating money for capital projects at Thunder Bay Lighting. One idea is to put aside $10000 per year, independent of growth. The second is to start with a smaller amount, $8000 per year, but to increase this in proportion to the expected company growth. The money will accumulate interest at 10%, and the company is expected to grow about 5% per year. Which plan will accumulate more money in 10 years?

Show all intermediate calculations and transfer results from Excel to Word but include both files, please and thank you.

Solution Preview

Please see the attached Excel and Word files.

As you can see, the scenario where $10,000 is invested each year regardless of the company's growth rate is the best ...

Solution Summary

Examine how total growth in the investment account increases over time.

$2.19