A small oil company wants to replace its Micro Motion Coriolis flowmeters with nickel-based steel alloy flowmeters from the Emerson F-Series. The replacement process will cost the company $50,000 three years from now. How much money must the company set aside each year beginning 1 year from now in order to have the total amount in 3 years? Assume the company earns a generous 20% per year on investment funds.

What will be an ideal response?


A = 50,000(A/F,20%,3)
= 50,000(0.27473)
= $13,736

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