9. Time Value of Money (10 Points)

The town of Riverwalk has just agreed to pay a pension to the town clerk. The pension will be $100,000 per year for the next 40 years. Nacho, the town manage, has decided that the town will not receive the clerks services in the future, so future tax players should not have to pay the pension. How much be put aside, assuming the town earns 2 percent compound annually? Does this funding approach make sense to you?