When both Ben and Arthur turned 65, they decided to compare their investment accounts. Who do you think had more? Ben, with his
total of $16,000 invested over eight years, or Arthur, who invested $78,000 over 39 years? Believe it or not, Ben came out ahead... $700,000 ahead! Arthur had a total of $1,532,166 while Ben had a total of $2,288,996. How did he do it? Starting early is the key. He put in less money but started eight years earlier. That’s compound interest for you! It turns $16,000 into almost $2.3 million! Since Ben invested earlier, the interest kicked in sooner. So How much did each boy make on their investment (write in words, not numbers)? Which strategy is best? Why? (10 points) PLEASE HELP ASAP!!
1 answer:
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Answer: Josh's bonus is $35,289.53.
In the question above, we need to look at the net savings that will occur from selling drinks instead of giving them as complimentary drinks. So we have,
Net Savings per year = $11.04 million
The company's MARR = 15%
Josh's bonus is 0.14% of the present value of three years' net savings.
Since the quantum of savings is constant each year, we can calculate the present value of these savings by using the Present Value of annuity formula.
PVA = Present value of three years' net savings = 25.20680529 million
Josh's bonus : 0.14% of present value of three years' net savings.
Josh's Bonus = $0.035289527 million or $35,289.53.