Monty has been hired to run a pension fund for dasdin


Monty has been hired to run a pension fund for Dasdin Company Limited, a small manufacturing firm. The firm currently has 5 million in the fund and expects to have cash inflows of $2 million a year for the first 5 years followed by cash outflows of $ 3 million a year for the next 5 years. Assume that interest rates are at 8%. How much money will be left in the fund at the end of the tenth year? If he 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 he afford to pay?

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Financial Management: Monty has been hired to run a pension fund for dasdin
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