Luis Has a Management Contract Which Grants Him a Lump

question 67

Multiple Choice

Luis has a management contract which grants him a lump sum payment of $20 million be paid upon the completion of his first five 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 4.5 percent on these funds. How much must the company set aside each year for this purpose?

• A) $3,775,042.93
• B) $3,798,346.17
• C) $3,801,033.67
• D) $3,655,832.79
• E) $4,038,018.22

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Definitions:

Trial Judge

A judge who presides over court trials, making decisions on matters of law and overseeing the proceedings.

Jury

A group of citizens selected to decide the outcome of a trial based on evidence presented to them in court.

Verdict

A formal decision made by a jury.

Judgment Notwithstanding

A legal decision where the court overturns the jury's verdict because the facts do not legally support the decision.