After the last financial crisis, a company is obligated to make additional quarterly payments to an unfunded pension fund during the next 3 years. The future value of those payments is to be $893,000. Actuarial estimations project the fund to earn interest at the rate of 8 percent per year. Payments are made at the end of each quarter.

Required 1: What is the present value of the additional payments to be made to the pension fund? $

Required 2: What is the amount of interest earned in the fourth period? $

Required 3: What is the total amount of contributed towards the pension fund at the beginning of period 8? $

Required 4: What is the total amount contributed towards the pension fund at the end of period 8 immediately after the 8th payment was made? $

Required 5: Assume the company had a very profitable year and at the moment of making the 10th payment they decided to advance the remaining funds to achieve the total future value required by actuarial estimations. How much it must pay in dollars at the end of period 10 and make no payments at the end of periods 11 and 12?

Answer rating: 100% (QA)

Solving the Pension Fund Problem Given Future value FV 893000 Interest rate r 8 per year Payment frequency Quarterly 4 per year Number of years 3 Requ... View the full answer