Question

Find the amount of each payment fo be made into a sinking fund which earns 7% compounded quarterly and produces $33,000 at the end of 35 years Payments are made at the end of each period The payment size $ ____? (Do not round untia the final antwer. Then round to the nearest cent.)

Answer 1

The amount of each payment to be made into a sinking fund is $56.06.

Step-by-step explanation:

To find the amount of each payment to be made into a sinking fund, we can use the formula for compound interest:

A = P(1 + r/n)^(nt)

Where:

• A is the future amount
• P is the payment size
• r is the interest rate
• n is the number of times interest is compounded per year
• t is the number of years

In this case, we want to find the payment size, so we can rearrange the formula:

P = A / ((1 + r/n)^(nt))

Substituting the given values:

P = 33000 / ((1 + 0.07/4)^(4*35))

P = $56.06