Question
Coastal Shipping is setting aside capital to fund an expansion project. Funds earmarked for the project will accumulate at the rate of $50 000 per
Coastal Shipping is setting aside capital to fund an expansion project. Funds earmarked for the project will accumulate at the rate of $50 000 per month until the project is completed in two years. Once the project starts, costs will be incurred at the rate of $150,000 per month over 24 months. Coastal currently has $ 250 000 saved. What is the minimum number of months it will have to wait before it can start if money is worth 18 percent nominal, compounded monthly? Assume that 1. Cash flows are all at the ends of months. 2. The first $50,000 savings occurs one month from today. 3. The first $150,000 payment occurs one month after the start of the project. 4. The project must start at the beginning of a month.
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