Reference no: EM133419503

Case Scenario: Student is working for small company named Adtom, LLC. There are five primary employees. Owners wish to establish a retirement account for the company. Their objective is that each employee has the possibility of accumulating $1,000,000 for retirement. Adtom is willing to contribute up to 3% of the employee's salary to help achieve this goal.

Your assignment is to provide answers to the following questions and make an overall recommendation to management whether to proceed or not. Management needs you to address the factors that could impact the result as well.

Questions to be answered in your "email" write-up:

• Based on the table of employee data and assuming a rate of return of 7.55% per year, if Adtom contributes 3% of each person's salary until they retire, how much would be in the employee's 401K (assuming only the employer's portion)? Does that meet the $500,000 goal?
• What total dollar amount would Adtom have to contribute to the 401k plan for each year to reach account value of $500,000 for each employee?
• If a 3% contribution rate does not meet the $500,000 objective when grown at 7.55%, what percentage of each employee's salary is required to meet the objective?
• If the rate of return increased to 10.25% per year, what is the new total amount of company contributions required?
• If the rate of return decreased to 3.75% per year, what is the new total amount of company contributions required?