1. The Great Giant Corp. has a management contract with its newly hired president. The contract requires a lump sum payment of $25,300,000 be paid to the president upon the completion of her first 6 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 5 percent on these funds. How much must the company set aside each year for this purpose?
a. $3,642,361.45
b. $1,403,072.25
c. $3,719,541.94
d. $1,265,000.00
e. $3,637,712.02
2. Your car dealer is willing to lease you a new car for $349 a month for 60 months. Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 4.5 percent, what is the current value of the lease?
a. $18,790.34
b. $18,764.34
c. $19,432.19
d. $19,491.19
e. $18,721.68
3. You expect to receive $7,000 at graduation in two years. You plan on investing it at 10 percent until you have $92,000. How long will you wait from now? (Do not round your intermediate calculations.)
a. 29.03 years
b. 25.03 years
c. 31.93 years
d. 32.51 years
e. 27.03 years