You want to have $1,000,000 in savings when you retire at the age of 65. You planned to make a one-time deposit into your retirement account and let it grow until you retire. Assuming that your retirement account earns 5% interest per year, how much should you deposit if you are 20 years old?
Justin Manufacturing is considering purchasing two machines. Each machine costs $9,000 and will produce cash flows as follows:
| End of Year | Machine A | Machine B |
| 1 | $5,000 | $1,000 |
| 2 | $4,000 | $2,000 |
| 3 | $3,000 | $12,000 |
Justin Manufacturing uses the net present value method to make the decision, and it requires a 15% annual return on its investments. The present value factors of 1 at 15% are: 1 year, 0.8696; 2 years, 0.7561; 3 years, 0.6575.
Which machine should Justin purchase and why?
You want to have $1,000,000 in savings when you retire at the age of 65. You are planning to make a one-time deposit into your retirement account and let it grow until you retire. Assuming that your retirement account earns 5 percent interest per year, how much should you deposit if you are 30 years old?
An electronic company is planning for huge investment to be undertaken in the next year. To conduct this project, the company has an overhaul investment amounting of USD 3 million. This project is expected to long last for 8 years and is expected to have a proceed of USD 500,000 annually. The market expects the rate of return with 10% annually. What do you think of the planned project as a managerial accountant, using the three methods of evaluation in capital budget?
