You have been hired to run the pension fund for a small company with five employees. You estimate, based upon their ages and retirement schedules, that your liabilities under the plan will be as follows:
Years Expected cash payments
6-10 $100,000
11-20 $250,000
21-25 $100,000
You currently have $ 500,000 in investments in the plan. You want to fully fund all your above-listed liabilities by the end of year 5. How much would you have to set aside each year for the next five years to ensure this, if your opportunity cost is 8%?