Question
No excel pleae! I am trying to learn the math for the exam! Thank you!! You have been hired to run a pension fund for
No excel pleae! I am trying to learn the math for the exam! Thank you!!
You have been hired to run a pension fund for Mackay Inc, a small manufacturing firm. The firm currently has $5 million in the fund and expects to have cash inflows (receipts) of $2 million a year for the first 5 years followed by cash outflows (payments) of $3 million a year for the next 5 years. Assume that interest rates are at 8%. (i) How much money will be left in the fund at the end of the tenth year? (ii) If you were required to pay a perpetuity after the tenth year (starting in year 11 and going through infinity) out of the balance left in the pension fund, how much could you afford to pay every year?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started