Thompson Mechanical Products is planning to set aside $150,000 now for possible replacement of large synchronous refiner motors when it becomes necessary. If the replacement isn’t needed for 5 years, how much will the company have in its investment set- aside account? Assume a rate of return of 18% per year.
What will be an ideal response?
F = 150,000(F/P,18%,5)
= 150,000(2.2878)
= $343,170
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