16. To make provision for the possible impact of recessions in the future, Bunbury Mutual Bank would like to set up a reserve fund. The fund will earn an interest rate of 7% per annum. If the fund pays a fixed amount of $13 million to the bank annually for an infinite period, starting three years from today and the annual payment grows at 2.5% per annum, how much does the bank need in the fund today?

Select one:

a. $235.8 million

b. $220.4 million

c. $270.0 million

d. $252.3 million