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Corp has a new manager. The compensation agreement calls for a single payment of $24,700,000 be...

Corp has a new manager. The compensation agreement calls for a single payment of $24,700,000 be paid after the first first 7 years of work. Corp wants to invest an equal amount each year to pay for this future obligatiuon. The interest rate on investment is 6 %. How much must be invested each year?

a. $2,871,128.92

b. $2,866,126,44

c. $1,639,027.80

d. $2,942,634.95

e. $1,482,000.00

Thank you!!

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Answer #1

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

24,700,000=Annuity[(1.06)^7-1]/0.06

24,700,000=Annuity*8.39383765

Annuity=24,700,000/8.39383765

=$2,942,634.95(Approx).

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