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.

You decide to create a simulation model that accounts for the following:

a. net sales growth rate per year from 1% to 6%

b. Annual portfolio growth rate on average 8% with a standard deviation of 5%.