A corporation creates a sinking fund in order to have $560,000 to replace some m

Question

A corporation creates a sinking fund in order to have $560,000 to replace some machinery in 9 years. How much should be placed in this account at the end of each quarter if the annual interest rate is 6.4% compounded quarterly? (Round your answers to the nearest cent.) I got $20584.04 but that was wrong

How much interest would they earn over the life of the account? I got $181025.52 but that was wrong

Determine the value of the fund after 2, 4, and 6 years.

For 2 years I got $75133.31 but that was wrong.

For 4 years I got $39948.69 but that was also wrong.

For 6 years I got $28283.27 but that was even wrong. please help

Explanation / Answer

A x FVIFAi=1.6%, n= 36 = $ 560,000 or A = $ 560,000 / 48.1760= $ 11,624

$ 11,624 should be placed in the account at the end of each quarter.

The interest that would be earned over the life of the account = $ 560,000 - ( $ 11,624 x 36) = $ 141,536

Value of the fund after 2 years = $ 11,624 x FVIFAi=1.6%, n=8 = $ 11,624 x 8.4626 = $ 98,369

Value of the fund after 4 years = $ 11,624 x FVIFAi=1.6%, n=16 = $ 11,624 x 18.0711 = $ 210,058

Value of the fund after 6 years = $ 11,624 x FVIFAi=1.6%, n=24 = $ 11,624 x 28.9806 = $ 336,870

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.