Great Giant Plc Has a Management Contract with Its Newly

question 79

Multiple Choice

Great Giant plc has a management contract with its newly hired chief executive.The contract requires a lump sum payment of €25 million be paid to the chief executive upon the completion of her first ten 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 6.5% on these funds.How much must the company set aside each year for this purpose?

• A)€1,775,042.93
• B)€1,798,346.17
• C)€1,801,033.67
• D)€1,852,617.25
• E)€1,938,018.22

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Definitions:

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