Your manager has tasked you with developing an investment planning model for common stocks based on the following assumptions:

1. Sales for the current year are $1,000,000.
2. Net sales are expected to increase by 2% per year for the next 5 years.
3. Current investments in common stock is $250,000.
4. Annual investment rate in common stock is 1% of net sales per year for the next 5 years.
5. Dividends rate is estimated at 8% per year.

Based on your analysis and taking into consideration the above questions, you decide to create a simulation model that accounts for the following:

• Net sales growth rate per year from 1% to 6%
• Annual portfolio growth rate on average 8% with a standard deviation of 5%

1. Run the simulation model you created one time. What would be the value of the investments in common stock at the end of the 5 years?
2. Based on your answer to question 3, what should the annual investment rate need to be if the goal were to reach approximately $500,000 at the end of year 5? HINT: Use Goal Seek.