How much money must the firm save each year

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Problem 1: Westover Ridge has a management contract with its president that requires a lump sum payment of $20 million to be paid upon the completion of the president's first ten years of service. The company can earn 5.5 percent on its investments and wants to set aside an equal amount of money each year over the next ten years to fund this obligation. How much money must the firm save each year?

A. $1,895,734.60

B. $1,398,346.17

C. $1,401,033.67

D. $1,553,355.37

E. $1,848,018.22

Problem 2: You retire at age 65 and expect to live another 30 years. On the day you retire, you have $564,500 saved. You expect to earn 3.5 percent, compounded monthly. How much can you withdraw from your savings each month if you plan to die on the day you spend your last penny?

A. $2,001.96

B. $2,192.05

C. $2,298.17

D. $2,372.00

E. $2,534.86

Reference no: EM132958139

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