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Aloiza [94]
3 years ago
8

A Firm needs to replace most of its machinery in five years at a cost of $500,000. The company wishes to create a sinking fund t

o have this money available in five years. How much should the quarterly deposits be if the fund earns 8%
Business
1 answer:
DaniilM [7]3 years ago
6 0

Answer:

The quarterly deposit required is $ 20,578.36

Explanation:

in order to determine the needed quarterly deposit, we make use of pmt formula in excel, which is given as :

=-pmt(rate,nper,-pv,fv)

rate is the rate of return on the deposit at 8% per year but 2% per quarter(8%/4)

nper is number of deposits required in the fund,which number of years ,5 multiplied by 4(4 deposits per year)

pv is the present of the value of the future amount which is zero as it is not required.

Fv is the amount expected in 5 years which is $500,000

=-pmt(2%,20,0,500000)

pmt= $20,578.36

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Answer:

The accumulated value of the deposits at the end of 9 years is <u>$11,242.18</u>

Explanation:

Note: Find attached the excel file for the calculation.

Since the deposits are made into the account at the end of each year, interest will be earned on the opening balance for each year since it remains the account for 12 months.

No interest will be earned on the deposit of $1,000 made at the end of each year.

The opening balance, interest earned and the deposit for each year are then added together to obtain the closing balance for each year.

Since the closing balance for year 9 is <u>$11,242.18</u>, this is therefore the accumulated value of the deposits at the end of 9 years.

Download xlsx
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4 0
3 years ago
On January 1, 2021, Algerian Delivery had 100,000 shares of common stock outstanding. The following transactions occurred during
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Answer:

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Explanation:

In order to calculate Algerian Delivery's basic earnings per share for the year ended December 31, 2021 we would have to make first the following calculations:

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