Question

A plan for plant expansion that is expected to cost $11 million. How much money must the company set aside now in a lump-sum investment to have the money in 2 years

Answer 1

Instructions are below.

Step-by-step explanation:

Giving the following information:

Future value= $11,000,000

Number of years= 2

To calculate the initial investment required, we need an interest rate. We weren't provided with this information, however, I will provide the formula and an interest rate.

i= 8% compounded annually.

To calculate the lump-sum, we need to use the following formula.

PV= FV/(1+i)^n

PV= 11,000,000/(1.08^2)

PV= $9,430,727.02