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You have been hired to run a pension fund for a small manufacturing firm

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You have been hired to run a pension fund for a small manufacturing firm. The firm currently has P5,000,000 in the fund and expects to have cash inflows of P2,000,000 a year for the first 5 years followed by cash outflows of P3,000,000 a year for the next 5 years. Assume that interest rates are 8%.

a.     How much money will be left in the fund at the end of the tenth year?

b.     If you were required to pay a perpetuity after the tenth year (starting in year 11 and going through infinity) out of the balance left in the pension fund, how much could you afford to pay?