1. Find the amount accumulated FV in the sinking fund. Hint [See Example 1.] (As
ID: 3317822 • Letter: 1
Question
1. Find the amount accumulated FV in the sinking fund. Hint [See Example 1.] (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $2,300 is deposited quarterly for 20 years at 4% per year
2. Find the periodic payments PMT necessary to accumulate the amount given in a sinking fund. HINT [See Example 2.] (Assume end-of-period deposits and compounding at the same intervals as deposits. Round your answer to the nearest cent.) $20,000 in a fund paying 7% per year, with monthly payments for 5 years
Explanation / Answer
1)
(1) quarterly rate = 0.04/4=0.01
number of installments = 20*4=80
FV = PMT((1+r)^n-1)/r, with r & n adjusted for periodicity
= 2300((1+.01)^(80) -1)/(0.01)
=279844.4999
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