Question 1
Assume your goal in life is to retire with three million dollars. How much would you need to save at the end of each year if interest rates average 5% and you have a 10-year work life?
◦ $15,000
◦ $1,841,740
◦ $238,512
◦ $600,000
Question 2
Concose Park Department is considering a new capital investment. The cost of the machine is $280,000. The annual cost savings if the new machine is acquired will be $165,000. The machine will have a 3-year life and the terminal disposal value is expected to be $35,000. There are no tax consequences related to this decision. If Concose Park Department has a required rate of return of 14%, which of the following is closest to the present value of the project?
◦ $190,880
◦ $87,750
◦ $126,755
◦ $103,130