1-) Please respond this first of all
Question A: Using your current age or closest 5-year increment (25, 30, 35, etc), you now decide to begin putting money aside for retirement. You plan to save $__5000____(pick a reasonable amount, under $10,000) at the end of each year (so the first deposit will be a year from now) until the age of 65. Suppose you will earn 8% per year on your retirement savings.
Answer: Current Age 30 , retirement age 65, so 65 – 30 = 35 (number of years)
1) How much will you have saved by the age of 65?
Future Value = Present Value (( 1+ rate )^ number of years -1) / rate
= 5000((1+ .08)^35-1) /.08
= $861,584
at 6% :
FV. = 5000((1+ .06)^35-1) /.06
= $557,173.9
at 10% :
FV. = 5000((1+ .1)^35-1) /.1
= $1,355,121.
2) What would happen if you waited to start another 10 years?
In 10 years , 40, so 65-40= 25 (number of years)
FV= 5000((1+ .08)^25-1) /.08
= $365,529.7
at 6% :
FV. = 5000((1+ .06)^25-1) /.06
= $274,322.6
at 10% :
FV. = 5000((1+ .1)^25-1) /.1
= $491,735.3
3) After calculating all of these scenarios, what were you most surprised to learn and why?
what surprised me the most was the fact that interest rate has so much impact on the amount of money you could save up regardless of the time. if you compare the amount of money saved in 35 years at 6% interest rate and the amount of money saved in 25 years at 10 percent interest rate its almost the same.
B) Honda Motor Company is considering offering a $2,000 rebate on its minivan, lowering the vehicle’s price from $30,000 to $28,000. The marketing group estimates that this rebate will increase sales over the next year from 40,000 to 55,000 vehicles. Suppose Honda’s profit margin with the rebate is $6,000 per vehicle. If the change in sales is the only consequence of this decision, what are the costs and benefits? Is this a good idea?
if we look at the cost of the rebate = $2000 rebate x 40,000 ( number of cars sold before rebate) = 80 million
and comprae ro the profit or benefit after rebate = $6000 profit x 15,000 ( increased number of vehicle’s sold) = 90 million
if we eliminate the cost from the benefit we are left with 10 million difference gained by Honda which clearly reflects as a good idea
also we could calculate the money flow comparing the old price with the new,
$28,000 x 55, 000(number of vehicles) = 1. 54 bilion
$30,000 x 40,000( number of vehicles) = 1. 2 billion
the difference is 300 million in favor of Honda.
Success Factors:
– increase sales.
– expand customer base.
– increase inventory.
Failure Factors :
– requires more labour
– increased material resources
– decreased value of product in the market.
Berk, J., DeMarzo, P., & Harford, J. (2021). Fundamentals of Corporate Finance. 5th Edition. New York: Pearson.
2-)Please respond this too
1-)Please share with the class a recent problem you have encountered either at work or in your personal life. Explain the situation, the problem, the steps taken to solve the problem and the outcome. Once finished, re-evaluate the problem using the reframing method discussed in the article, Are You Solving The Right Problems. Share your process of reframing and how your understanding of the problem has changed. If your understanding of the problem has not changed, explain why. ?
We noticed that our kids decided to turn the kitchen into their second playground. They would relocate most of their toys there. As a result, I found myself often cautioning them on where not to go and what not to touch in the kitchen. I realized that it worked me up and wore me out. So, we decided to buy a safety gate and install it at the entrance of the kitchen. Apparently, problem one seemed to be solved, but another problem resurfaced with the installation of the gate.
Now, to the installation of the gate, my hubby was on it for over an hour, and his efforts yielded no results. We began to wonder what could have gone wrong, and why wouldn’t the two sides of the gate align.
So, we employed the analytical and creative problem-solving approaches. You will understand my reasons for saying that below.
First, we defined the problem. In that moment, I asked hubby what the problem was, as I read the frustration and bewilderment on his face. He said the gate would not align at the middle. Hence, it would not even lock.
Second, we generated plausible alternatives since we thought we already figured out the ultimate problem. The alternatives were (i) check the manual again to know where the mistake was, (ii) uninstall the gate and start all over again, (iii) change the spots where the gate was drilled to the studs on both sides or try to force the two sides to align, (iv) check YouTube videos of similar products and see the installation process.
Third, we evaluated all our alternatives and decided to pick one. However, when we got to the point of implementing the alternatives we generated, we noticed that they wouldn’t work.
So, we redefined and reframed the problem. This time, we had seen a YouTube video. Thus, we checked the dimensions of the gate carefully and realized that the gate is not wide enough for the entrance of the kitchen (just a couple of inches difference in width). This means that the original problem is not about the gate’s alignment, but about its width in comparison to the wideness of our kitchen entrance.
Consequently, we improved and implemented the generated alternative. I suggested what I noticed in the YouTube video, but with a twist to it. I advised that we extend the knots outwards and tilt the upper part of the left side to the right, and then shift the lower part of the right side to the left. After making this adjustment, viola! It clicked!
As a follow up on this question, I read the articles and found them very informative. After reading the articles, and the ideas embedded in them, I discovered that “preconceived notions, combined with the brain’s tendency to see what it wants or expects to see, greatly affect how we solve problems and make decisions” (Green & Hedges, 2012). More so, if we do not reframe our situations by redefining and re-evaluating the problems and methods used in solving them, we may not solve the right problem (Wedell-Wedellsborg, 2017). Based on the fundamental knowledge discovered from these articles, I realized that my hubby and I reframed the problem and we leveraged on it to find the right solution.
