Nuclear decommissioning fund

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Reference no: EM13770987

Utilities which operate nuclear power plants are required to place funds into a "Nuclear Decommissioning Fund" in order to be sure that adequate funds are available to decommission the plant at the end of its useful life. A certain utility requires $150 million to be available 25 years from now. Two investment firms are bidding to be the utility's fund manager.

Investment Firm A claims that they can offer a 9% return and suggests an annual contribution of $1.5 million to the fund.

Firm B claims that an 8% return is possible and suggests an annual fund contribution of $2.1 million.

Analyze the two proposals using Net Future worth Analysis.

Reference no: EM13770987

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