1. Find the periodic payments PMT necessary to accumulate the amount given in a

Question

1. 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.)

$40,000 in a fund paying 5% per year, with monthly payments for 10 years

2. Find the present value PV of the annuity necessary to fund the withdrawal given. HINT [See Example 3.] (Assume end-of-period withdrawals and compounding at the same intervals as withdrawals. Round your answer to the nearest cent.)

$300 per month for 15 years, if the annuity earns 5% per year

Explanation / Answer

2)

adjusting r & n for periodicity , the formula is
PV = PMT(1-(1+r)^-n)) /r

Here PMT=$300,    r=0.05/12,    n=12*15   
PV = 300(1-(1+0.05/12)^(-12*15))/(0.05/12) = $37936.5728

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