Volunteer Pharmaceuticals (VP) Wants to Set Aside Money in the R&D

Short Answer

Volunteer Pharmaceuticals (VP) wants to set aside money in the R&D fund to seek supplemental drug applications of its two newly developed drugs. Instead of putting away $780 million now, VP plans to set aside $A each year from year 1 through 40. What should the value of A be if VP expects to earn 7% per year for the first 5 years and 2% per year for the remaining years?