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a company estimates that it will need $47,000 in operating costs in the first year...

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Finance

a company estimates that it will need $47,000 in operating costs in the first year and this amount is projected to increase by %4 each year for the next 10 years. How much money should the company invest now so that it will have enough funds to cover those costs for the 10 years? Assume that the funds will be invested in an account that earns an interest rate of 8% per year.

1. How much is the required initial investment?

a) $797,450 b) $369,374 c) $538,279 d) $360,336

2. How much will you have if the interest rate was only 4% per year, instead of 8%?

a) $360,336 b) $560,440 c) $668,957 d) $451,923

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