To solve this problem, we use the Future Value of an Annuity Formula since the company is making regular annual deposits, and the interest is compounded annually.

The formula for the future value of an annuity is:

$FV = P \times \frac{(1 + r)^n - 1}{r}$

Where:

• $FV$ is the future value of the annuity (the amount in the account after the last payment),
• $P$ is the annual deposit amount,
• $r$ is the interest rate per period,
• $n$ is the number of periods.

Given:

• $P = 110,000$ (annual deposit),
• $r = 7\% = 0.07$ (annual interest rate),
• $n = 10$ (number of years).

Now, let's plug the values into the formula:

$FV = 110,000 \times \frac{(1 + 0.07)^{10} - 1}{0.07}$

Step-by-step calculation:

1. Calculate $(1 + 0.07)^{10}$:

$1.07^{10} = 1.967151$

2. Subtract 1:

$1.967151 - 1 = 0.967151$

3. Divide by $r = 0.07$:

$\frac{0.967151}{0.07} = 13.816441$

4. Multiply by the annual deposit $P = 110,000$:

$110,000 \times 13.816441 = 1,519,808.51$

Final Answer:

The future value of the annuity is approximately $1,519,809.

Would you like further details on the calculations or any clarification?

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Here are 5 related questions to expand on this topic:

1. How would the final balance change if the interest rate were 8% instead of 7%?
2. What if the company only made deposits for 5 years instead of 10 years?
3. How does the formula change if the deposits are made at the beginning of each year instead of the end?
4. How much interest did the company earn over the 10 years?
5. What is the present value of this future amount if we discount it at 7% annually?

Tip: When dealing with compounded interest problems, remember that small changes in the interest rate can have significant effects on the final value due to exponential growth.