Question

Find the amount of each payment to be made into a sinking fund which earns 5% compounded quarterly and produces S47,000 at the end of 35 years Payments are made at the end of each period The paym ent size is $ (Round to the nearest cent.)

Answer 1

Answer:

$8,355.555

Step-by-step explanation:

Hello,

This question relates to compound interest and to solve it, we'll need to use the right formula.

C.P = P(1 + r/n)^nt

C.P = compound interest

P = principal

R = rate

N = number of times compounded

T = time

C.P = $47,000

P = ?

R = 5% = 0.05

N = 4

T = 35 years

Substituting the variables into the equation,

47,000 = P (1 + 0.05 / 4) ^ (4 × 35)

47,000 = P (1.0125) ^ 140

47,000 = P × 5.625

Divide both sides by 5.625 and solve for P

P = 47,000 / 5.625

P = $8,355.555

The initial investment was $8,355.555