Question

Find the size of each of 66 payments made at the end of each year into a 88​% rate sinking fund which produces ​$36000 at the end of 66 years.
The payment size is $

Answer 1

Answer: $7787.99

Step-by-step explanation:

We know that the formula to find the periodic payment on an annuity is given by :-

$P=\dfrac{r(PV)}{1-(1+r)^{-n}}$, where PV is the present value , r is the rate of interest ( in decimal ) and n is the number of payments.

Given : Present value : $36000

Rate of interest = 8%=0.08

Time period = 6 years

Then , the periodic payment will be :-

$P=\dfrac{(0.08)(36000)}{1-(1+0.08)^{-6}}\\\\\Rightarrow\ P=\dfrac{2880}{0.3698}\\\\\Rightarrow\ P=\ 7787.99$

Hence, the payment size is $7787.99.