The fund and expects to have cash inflows

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Monty has been hired to run a pension fund for Dasdin Company Limited, a small manufacturing firm. The firm currently has 5 million in the fund and expects to have cash inflows of $2 million a year for the first 5 years followed by cash outflows of $ 3 million a year for the next 5 years. Assume that interest rates are at 8%. How much money will be left in the fund at the end of the tenth year? If he were required to pay a perpetuity after the tenth year (starting in year 11 and going through infinity) out of the balance left in the pension fund, how much could he afford to pay?

Reference no: EM131304614

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