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crimeas [40]
3 years ago
11

George is offered an investment opportunity by his friend Ray. He asks George for $6,900 and offers to repay him $12,990 after a

period of ten years. George considers investing his money in his friend's project; however, the bank in his community offers an annual rate of interest of 9% on every deposit. Which do you think is the better investment option for George
Business
1 answer:
SVETLANKA909090 [29]3 years ago
8 0

Answer:

Depositing in bank is a better option.

Explanation:

For this solution, we can either determine the interest rate given to George by his one of the friend or the future worth method,

Future worth method is used here,

Given that,

PV = $6,900

R = 9%

N = 10 Years

FV = PV\times(1+R)^{N}

FV = 6,900\times(1+0.09)^{10}

FV = 6,900\times(1.09)^{10}

FV = 6,900 × 2.3673

FV = $16,334.81

Since, the future worth of investing in bank is more than the money to be offered by the George's friend (16,334.81 > 12,900) and hence, depositing in bank is a better option.

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Dunstreet's department store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out.
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Answer:

219 sheets

Explanation:

D = 5000 per year,

d = daily demand = 5000/365 = 13.70 sheets

T = time between orders (review) = 14 days

L = Lead time = 10 days

σd= Standard deviation of daily demand = 5 per day

I = Current Inventory = 150 sheets Service Level

P = 95% (Probability of not stocking out) q=d(L+D)z σ T+L-1

σ T+L-1= square root (T+L)=5 square root 14+10= 24.495

From Standard normal distribution, z = 1.64 for 95% Service Level (or 5% Stock out)

q=13.70*(14+10)+1.64(24.495)-150

= 218.97 →219 sheets

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Answer:

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Explanation:

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Answer:

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The net present value can be used to determine if the present value of the expected income stream associated with the investment would be greater than the full cost of the investment project.

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