Purchase Solution

total growth in the investment account increases over time

Not what you're looking for?

Ask Custom Question

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.

Purchase this Solution
Solution Summary

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

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 ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

View More Free Quizzes
Related BrainMass Solutions

  • international investment position data/ GDP data

    It is the primary indicators used to gauge the health of the economy. The increase in GDP figures over the period of time shows the increase in the size of the US Economy over the period of time.

  • total return

    Growth stock companies are often younger companies and retained earnings are usually paid back into capital investment or into cash savings rather than paid out in dividends so the total return is only the difference in the selling price at time of sale

  • Multiple Choice

    The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same. The discount rate increases. The riskiness of the project's cash flows increases.

  • Article on large scale economic issues

    If history is a guide, the current account deficit will narrow in time but the adjustment process is the important question at hand.

  • E17-12 (Journal Entries for Fair Value and Equity Methods)

    Each year, the investor does the following: (1) It increases (debits) the investment account and increases (credits) revenue for its share of the investee's net income.

  • This post addresses terminal account value.

    It would therefore be most important for an organization to use terminal value as a significant part of net present value to ensure that the organization will not lose money on projects that have the highest increases in total cash flows from the project

  • evaluaing the attractiveness of a potential project

    NPV states that money reduces in value over time --- the dollar (or any currency) will actually decline in value over time due to economic factors such as inflation, interest rates, decline in purchasing power, price increases, and the like.

  • Current-account surplus is not always a sign of health

    At the same time, countries growing rapidly are likely to face current-account deficits, as economic growth generates domestic investment opportunities that can't all be financed through domestic savings.

  • Income Tax Expense, Investment Revenue, and Tax Liabilities

    Reduces the investment account and increases investment revenue. B. Increases the investment account and increases investment revenue. C. Reduces the investment account and reduces investment revenue. D.

View More Related Solutions