The expansion plans of IUKL call for the/company to add capacity for a new programs in...

The expansion plans of IUKL call for the/company to add capacity for a new programs in 6 years. The company wants to have RM500,000, available before it announces the program. If A the company sets aside RM60,000 now and RM95,000 in year 2, what uniform annual amount -> will it have to put in an account in years 3 through 5 to have the RM500,000? Assume the account earns interest at 9% per year COMPOUNDED MONTHLY.

plz solve in detail to get thums up

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Expert Solution

Amount kept today = RM 60,000

Amount in year 2 = RM 95,000

Let us assume the amount kept from year 3 through year 5 is RM A.

Interest rate = 9% compounded annually

Effective rate of interest = (1 + 0.09/12)¹² - 1 = 0.0938

Rate of interest = 9.38% per annum

Here the company will start the project in the 6th year. Therefore, the amount will be required at the end of year 5 and at the beginning of year 6.

The future value is RM 500,000. Equate it to the above equation

Here I have considered the firm will invest at the end of year 5 and beginning of year 6. As it is mentioned the firm will invest for the new program in year 6.

Please contact if having any query will be obliged to you for your generous support. Your help mean a lot to me, please help. Thank you.

Rahul Sunny answered 1 year ago

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