How much must the company set aside each year


The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $25,000,000 be paid to the president upon the completion of her first 8 years of service. The company wants to set aside an equal amount of funds each year to cover this anticipated cash outflow. The company can earn 7 percent on these funds. How much must the company set aside each year for this purpose?

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Finance Basics: How much must the company set aside each year
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