please i need step by step answer for this question using the intrest table. A m
ID: 2506520 • Letter: P
Question
please i need step by step answer for this question using the intrest table.
A major drug company anticipates that in future years it could be involved in litigation regarding perceived side effects of one of its antidepressant drugs. In order to prepare a war chest, the company wants to have 200 million available in 10 years from now. The company expects to set aside 12 million the first year and uniformly/constantly increasing amounts in each of the next/following 5 years (so a total of six cash flows). If the company can earn 12% per year on the money it sets aside, by how much must it increase the amount set aside each year to achieve its goal of $200 million at the end of 10 years?Explanation / Answer
12million(1+0.12)^9 + 12million(x)(1+0.12)^8 + 12million(x)(x)(1+0.12)^7 + 12million(x)(x)(x)(1+0.12)^6 + 12million(x)(x)(x)(x)(1+0.12)^5 + 12million(x)(x)(x)(x)(x)(1+0.12)^4. = 200million
X is the uniform rate by which savings should be increased.
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