Question

Winston Enterprises would like to buy some additional land and build a new factory. The anticipated total cost is $175.86 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 $670,000 a month for this purpose. The firm earns 6 percent compounded monthly on the funds it saves. How long does the company have to wait before expanding its operations

Answer 1

Answer:

the time period is 168.07 months

Explanation:

The computation of the time period is shown below:

Given that

RATE = 6% ÷ 12 = 0.5%

PMT = $670,000

FV = $175,860,000

PV = $0

The formula is shown below:

= NPER(RATE;PMT;-PV;FV;TYPE)

After applying the above formula, the time period is 168.07 months