Frank is proposing a project to management. His project will require $300,000 to be initiated and will last for two years. Considering that the current rate of return is six percent, what must Frank's project be worth in two years as a minimum for management to consider this project?
Answer: C. You can use the future value formula to determine the minimum amount that Frank's project should be worth. In this instance the formula is $300,000(1.1236), as the interest rate is six percent and the project will last for two years. If Frank's project is worth less than $337,080, it's not a good financial decision for the organization to make.