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QUESTION
You are the chief financial officer of a firm. The firm has an expected liability (cash outflow) of $2 million in ten years at a discount rate of 5%.
You are the chief financial officer of a firm. The firm has an expected liability (cash outflow) of $2 million in ten years at a discount rate of 5%.
- Calculate the amount the firm would need on the present date as savings to cover the expected liability.
- Calculate the amount the firm would need to set aside at the end of each year for the next ten years to cover the expected liability.
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******* value * PV * FV/(1+r)t= ********************** to *** ***** each **** * * * ****************** * 1227827*005/(1-1/10510) *********