Answer:
Instructions are listed below.
Explanation:
Giving the following information:
The company wants to have enough cash invested on December 31, 2021, to provide for all three employees. To accumulate enough cash, they will make three equal annual contributions to a fund that will earn 11% interest compounded annually.
We were not provided with enough information to calculate the annual deposit needed, but, I will provide with the formula and a small example:
To calculate the annual deposit we need to use the following formula:
FV= {A*[(1+i)^n-1]}/i
A= annual deposit
Isolating A:
A= (FV*i)/{[(1+i)^n]-1}
For example:
The amount of money needed for December 31, 2021, is $100,000.
A= (FV*i)/{[(1+i)^n]-1}
FV= 100,000
i= 0.11
n= 3
A= (100,000*0.11) / [(1.11^3)-1]= $29,921.31
