What annual contribution to a savings fund

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Anticipated growth in trade has the company thinking about buying one more ship. A ship suitable for a new trip (not related to any previously discussed) costs 8 million Phils, and is anticipated to be needed in 8 years, with payment due on delivery at the end of the 7th year.

Question a. As the prudent and sophisticated financial advisor to the company, what annual contribution to a savings fund would you recommend the company make to accumulate the necessary funds under the assumption that the company can earn a 10% return on investment.

Question b. What annual contribution would you, as the prudent financial advisor, recommend if the company can earn an 7% return on investment?

Reference no: EM132485216

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