You have three alternate plans available to perform a task. Plan A has a 5 year planning horizon, Plan B has a 7 year planning horizon and Plan C has a 3 year planning horizon.
Using the LCM approach what is the appropriate LCM planning horizon?
In addition, what is one questionable assumption that this application of LCM causes for this particular scenario?
A $10,000 deposit is made in a Savings account. For the first 4 years the interest rate is 3% per year. At the end of the fourth year a $5,000 withdrawal is made.
The remainder is put into the account now updated to yielding 6% per year for the next 3 years. How much is in savings at the end of this time?