Marko, Inc. is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $9,285, $7,120, and $14,263 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a 9.84 percent rate of return is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?
The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $37,723,793 to be paid to the president upon the completion of her first 14 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. The company can earn 6.97 percent on these funds. How much must the company set aside each year for this purpose?