The Thanatos Health System is saving for their future expansion a pre-established Accountable Care Organization, Rest In Peace (RIP). Due to the foresight of Thanatos’ management’s vision, RIP was established 10 years ago and will be expected to go through major restructuring 8 years from now (t = 8). Reorganization costs for institutions today are currently $14,500 a year, but they are expected to increase at a rate of 3.5% a year. Thanatos expects RIP to take 4 years to complete all reorganization once begun. All direct and indirect costs will be due at the beginning of each year of reorganization (at t = 8, 9, 10, and 11). So far, Thanatos has accumulated $15,000 in the reorganization account. Their long-run financial plan is to add an additional $5,000 at the beginning of each of the next 4 years (at t = 0, 1, 2, and 3). Then they plan to make 4 equal annual contributions at the end of each of the following 5 years (t = 4, 5, 6, 7, and 8). They expect their investment account to earn 9%. How large must the annual payments be at t = 4, 5, 6, 7, and 8 to meet RIP's anticipated reorganization costs?
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