Your company has made regular payments to an employee pension plan in the past. Since the plan is now overfunded, future payments will be delayed. No payments are planned today, or at the end of years 1 through 3. A payment of $500,000 will be made at the end of years 4 through 8. A payment of $350,000 will be made at the end of year 10. Do the following and include an appropriate cash flow diagram for each part. Assume an annual interest rate of 5.2%.
a) Determine the present worth of the scheduled pension plan payments (at time t = 0 years).
b) Determine the future worth of the scheduled pension plan payments (at time t = 10 years). [Hint: You can save time by using the result from part a)].
c) Determine the equivalent uniform annual payment (for the 10 years) that has thesame (present or future) worth. [Hint: You can use the result from part a) or b) to find the annual annuity].