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

Explanation:

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

`P=(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=((0.08)(36000))/(1-(1+0.08)^(-6))\\\\\Rightarrow\ P=(2880)/(0.3698)\\\\\Rightarrow\ P=\$7787.99`

Hence, the payment size is $7787.99.