Jack is a very successful manager. He has a management contract which grants him a lump sum payment of $20 million be paid upon the completion of his first fifteen years of service. The company wants to set aside an equal amount of funds at the end of each year to cover this anticipated cash outflow for Jack's compensation. The company can earn 4 percent per year on these funds. How much must the company set aside each year for this purpose? Select one alternative: O $572,888.43 $998,822.01 O $133,333.33

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Jack is a very successful manager. He has a management contract which grants him a lump sum payment of $20
million be paid upon the completion of his first fifteen years of service. The company wants to set aside an equal
amount of funds at the end of each year to cover this anticipated cash outflow for Jack's compensation. The
company can earn 4 percent per year on these funds. How much must the company set aside each year for this
purpose?
Select one alternative:
O $572,888.43
$998,822.01
O $133,333.33
O $756,321.01
Transcribed Image Text:7 Jack is a very successful manager. He has a management contract which grants him a lump sum payment of $20 million be paid upon the completion of his first fifteen years of service. The company wants to set aside an equal amount of funds at the end of each year to cover this anticipated cash outflow for Jack's compensation. The company can earn 4 percent per year on these funds. How much must the company set aside each year for this purpose? Select one alternative: O $572,888.43 $998,822.01 O $133,333.33 O $756,321.01
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