Question
QUESTION: How much should I invest in the CD for this bike shop and why? New Company-BIKE SHOP You will be a totally integrated company
QUESTION: How much should I invest in the CD for this bike shop and why?
New Company-BIKE SHOP
You will be a totally integrated company that does it all from marketing, to sales, to production. You will have limited financial resources and complete accounting responsibility.
As the executive team, you will provide the seed capital (investment money) needed to start your business up. You can use this money to build a production facility, open sales outlets, and design brands. You will invest 750,000 in each of the first four quarters of business. An additional 3,000,000 will become available in quarter 5 from venture capitalists, for a total of 6,000,000.
Your executive team has the next two years (eight quarters or decision periods) to get this company off the ground. Within this time frame, your firm should become self-sufficient and earn substantial profits from your operations.
Commercial banks and other institutions in the marketplace offer a 3-month certificate of deposit that allows you to invest cash and earn a 1.5% quarterly interest rate. If you decide to invest money this quarter, you will be able to withdraw it at the beginning of the next quarter. Certificate of Deposit 3-Month Certificate of Deposit Total 3-month certificate of deposit investment from last quar How much would you like to withdraw from your account? How much would you like to add to your account? 3-month certificate of deposit account for current quarter Quarterly interest rate Interest to earn Commercial banks and other institutions in the marketplace offer a 3-month certificate of deposit that allows you to invest cash and earn a 1.5% quarterly interest rate. If you decide to invest money this quarter, you will be able to withdraw it at the beginning of the next quarter. Certificate of Deposit 3-Month Certificate of Deposit Total 3-month certificate of deposit investment from last quar How much would you like to withdraw from your account? How much would you like to add to your account? 3-month certificate of deposit account for current quarter Quarterly interest rate Interest to earnStep by Step Solution
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