Question

The Pocatello Pokeys have just hired a new team manager. The contract requires $24,600,000 be paid to the manager after she completes 8 years of service. The team wants to set aside an equal amount of money each year to cover this payment. If the team earns 7 percent on their investments, how much must the team set aside each year

Answer 1

The Pocatello Pokeys have just hired a new team manager. The contract requires $24,600,000 to be paid to the manager after she completes 8 years of service.  the amount team set aside each year is mathematically given as

A = 1,953,944.9

How much must the team set aside each year?

Generally, the equation for the team set aside money is mathematically given as

A=Contract amount/ Miselennous

Therefore

$A=\frac{24,400,000 }{(1.08^8 + 1.08^7 + 1.08^6 + 1.08^5 + 1.08^4 + 1.08^3 + 1.08^2 + 1.08^1+ 1.08^0)}$

A = 1,953,944.9

In conclusion, the amount the team set aside each year

A = 1,953,944.9

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