How many years will the firm be able to make annual payment

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Problem 1: A mining company knows that eight years from now it will be required to pay $4,000,000 per year to restore the site of a major mine. It is unsure as to how many of these annual payments will be required, but it knows that these payments are likely to be required for many years (but it is confident that the payments will not be required forever). The first of the annual payments will occur at the end of year eight. To meet these obligations, the company invests $10,224,000 today. Assuming an annual interest rate of 12% for all years throughout the future, for how many years will the firm be able to make the annual payments of $4,000,000?

Reference no: EM132684570

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