Utilities which operate nuclear power plants are required


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 $190 million to be available 20 years from now. Two investment firms are bidding to be the utility's fund manager. Investment Firm A claims that they can offer a 12% return and suggests an annual contribution of $2.7 million to the fund.

Firm B claims that an 18% return is possible and suggests an annual fund contribution of $2.1 million.

Analyze the two proposals using Net Future Worth Analysis.

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Financial Management: Utilities which operate nuclear power plants are required
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