Fenland Co.plans to retire $100 million in bonds in five years,so it wishes to create a fund by making equal investments at the beginning of each year during that period in an account it expects to earn 8% annually.What amount does Fenland need to invest each year?

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The correct answer is A.The present value of the $100 million bond retirement in five years at 8% is $78,915,385. To accumulate this amount in five years, Fenland needs to invest $15,783,077 at the beginning of each year.