The Lexford Co

The Lexford Co. has a management contract with their newly hired president. The contract requires a lump sum payment of $12 million to be paid to the president upon the completion of her first three
Years of service. The company wants to set aside an equal amount of funds each year to cover this
Anticipated cash outflow. Lexford can earn 6% on these funds. How much must the company set
Aside each year for this purpose?

A) $3,555,960.14
B) $3,614,023.67
C) $3,689,004.16
D) $3,723,071.42
E) $3,769,317.75