You have been hired to run a pension fund for a small manufacturing firm. The firm currently has P5,000,000 in the fund and expects to have cash inflows of P2,000,000 a year for the first 5 years followed by cash outflows of P3,000,000 a year for the next 5 years. Assume that interest rates are 8%.

a.How much money will be left in the fund at the end of the tenth year?

b.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?

With solution please, thank you! ;)