Question
Scenario: Your manager has tasked you with developing an investment planning model for common stocks based on the following assumptions: Sales for the current year
Scenario: Your manager has tasked you with developing an investment planning model for common stocks based on the following assumptions: Sales for the current year are $1,000,000. Net sales are expected to increase by 2% per year for the next 5 years. Current investments in common stock is $250,000. Annual investment rate in common stock is 1% of net sales per year for the next 5 years. Dividends rate is estimated at 8% per year.
What should the annual investment be if the companys goal were to reach $500,000 at the end of the 5 years? HINT: Use Goal Seek in Excel (Review Appendix A if needed).
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