Luis has a management contract which grants him a lump sum payment of $20 million be paid upon the completion of his first five 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 4.5 percent on these funds. How much must the company set aside each year for this purpose?
A) $3,775,042.93
B) $3,798,346.17
C) $3,801,033.67
D) $3,655,832.79
E) $4,038,018.22

Question

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The Answer of Luis has a management contract which grants him a lump sum payment of $20 million be paid upon the completion of his first five 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 4.5 percent on these funds. How much must the company set aside each year for this purpose?
A) $3,775,042.93
B) $3,798,346.17
C) $3,801,033.67
D) $3,655,832.79
E) $4,038,018.22

Luis Has a Management Contract Which Grants Him a Lump