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How much does the company need to invest today

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Question - ABC Consumer Insurance Pty Ltd sells extended warranties on appliances that provide coverage after the manufacturers' warranties expire. An analyst for the company forecasts that the company will have to pay warranty claims of $3 million per year for three years, with the first claims expected to occur four years from today. The company intends to set aside a lump sum today to cover these costs, and any amount invested today will earn 8% per year. How much does the company need to invest today?

Reference no: EM133160255

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