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Self-insurance is being considered for one area of a chemical company. The fixed-capital investment being insured is $50,000, and insurance costs for complete protection amount to $400 per year. If self-insurance is used, a reserve fund will be set up under an ordinary annuity plan. All money in the fund can be assumed to earn interest at a compound interest rate of 6%. Neglecting any charges connected with administration of the fund, how much money must be deposited in the fund at the beginning of the program in order to have sufficient funds accumulated to replace a $50,000 loss after 10 years?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92640329

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