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A sinking fund is being established the goal of which is to reach $100,000. Calculate the payment where i is the interest rate per period. N= 22 i= .03

User Sheinis
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2 Answers

7 votes

Answer:

$60,241

Explanation:

User Yasutaka
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8.4k points
4 votes

Answer:

Initial deposit = $ 60,241 (Rounding to the next whole dollar)

Explanation:

1. Let's review the information given to us to answer the question correctly:

Future Value = 100,000

Interest rate = 0.03

N = 22

2. Let's calculate the initial deposit for the sinking fund, this way:

Future Value = Initial deposit * (1 + i*N)

Replacing with the real values:

100,000 = Initial deposit * (1 + 0.03 * 22)

100,000 = 1.66 Initial deposit

Initial deposit = 100,000/1.66

Initial deposit = $ 60,241 (Rounding to the next whole dollar)

User Ehud
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