Question

Find the required weekly payment into a sinking fund needed to accumulate $35,000 in 15 years by making weekly deposits into an account at 4.25% compounded weekly

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Answer 1

$32.10

Explanation:

The amount to be accumulated in 15 years is the future value of the sinking fund, hence, using the future value formula below, we can determine the required weekly payment as appropriate:

Future value=weekly payment*(1+r)^n-1/r

Future value=$35,000

weekly payment is the unknown

r=weekly interest rate=4.25%/52=0.08173077% ( I use 8 decimal places in order to achieve accuracy)

n=number of weekly payments in 15 years=15*52=780

35000=weekly payment*(1+0.08173077% )^780-1/0.08173077%

35000=weekly payment*(1.89125311 -1)/0.000817308

35000=weekly payment*0.89125311 /0.000817308

weekly payment=35,000*0.000817308 /0.89125311

weekly payment=$32.10