How long would it take for Nico to save an adequate amount for retirement if he deposits $40,000 per year into an account beginning one year from today that pays 12 percent per year if he wishes to have a total of $1,000,000 at retirement?

It will take Nico approximately 12 years

Explanation:

Payments = $40000

r = 12%

Future Value = 1000 000

Future Value annuity = Payments((1 + r)^n - 1)/r

1000000 = 40000((1 + 0.12)^n - 1)/0.12

40000((1.12)^n - 1) = 1000000 x 0.12

(1.12)^n -1 = 120000/40000

(1.12)^n = 3 + 1

nlog(1.12) = log(4)

n = log(1.12)/log(4) = 12.232510748

n ≈ 12 years

It will take Nico approximately 12 years

12.29 years

Explanation:

to determine the number of years (n) we can use the future value formula for an annuity:

future value of an annuity = payment x [(1 + r)ⁿ - 1] / r

1,000,000 = 40,000 x [(1 + 12%)ⁿ - 1] / 12% = 40,000 x (1.12ⁿ - 1) / 12%

(1.12ⁿ - 1) = 1,000,000 x 12% / 40,000

(1.12ⁿ - 1) = 3

1.12ⁿ = 3 + 1 = 4

nlog1.12 = log4

n = log4 / log1.12 = 0.602 / 0.049 = 12.29 years

C. basing decisions on sunk costs.

Explanation:

This is the option that does not represent a step in the managerial decision-making process. Defining business goals is an extremely important step, as this is the factor that provides guidance to managers and informs them of which path to follow. Identifying alternative courses of action is important because it allows managers to think outside the box. Finally, gathering and analyzing relevant information allows managers to act in an informed way.