Question

Find the amount of each payment to be made into a sinking fund which earns 9​% compounded quarterly and produces ​$43 comma 000 at the end of 3.5 years. Payments are made at the end of each period.

Answer 1

Answer:

$2647.18

Step-by-step explanation:

Formula : $A[\frac{1+(\frac{r}{n})^{n}-1 }{(\frac{r}{n} )}]$

Future value = $43,000

r = rate of interest = 9% = 0.09

t = 3.5 years (compounded quarterly)

n = number of compounding (3.5 × 4) = 14

Now put the values into formula :

43000 = $A[\frac{1+(\frac{0.09}{4})^{14}-1 }{(\frac{0.09}{4} )}]$

$43000=A(\frac{(1+0.0225)^{14}-1}{\frac{0.09}{4}})$

$43000=A(\frac{(1.0225)^{14}-1}{0.0225})$

43000=A($\frac{0.365483427}{0.0225})$

43,000 = A(16.243708)

A = $\frac{43000}{16.243708}$

A = $2,647.17883 ≈ $2647.18