Winston Enterprises would like to buy some additional land and build a new facto

Question

Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $136 million. The owner of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for the entire expansion project. Management has decided to save $450,000 a month for this purpose. The firm earns 6% compounded monthly on the funds it saves. How long does the company have to wait before expanding its operations? Answer 184.61 months 199.97 months 234.34 months 284.61 months 299.97 months

Explanation / Answer

Let the number of years be n.

Income is 450,000 + 450,000 * 1.005 + .... + 450000 * 1.005^( n -1) = 136,000,000

=> n = 184.61 months

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