Question

The cost of replacing part of a cell phone videochip production line in 6 years is estimated to be $500,000. At an interest rate of 14% per year, compounded semiannually, the uniform amount that must be deposited into a sinking fund every 6 months is closest to: ( a ) $21,335 ( b ) $24,825 ( c ) $27,950 ( d ) $97,995

Answer 1

( c ) $27,950

Step-by-step explanation:

The computation of the uniform amount that should be deposited is shown below:

= Accumulated sum of amount × (A/F, 14% ÷ 2, 2 × 6)

= $500,000 × (A/F, 7%, 12)

= $500,000 × 0.0559

= $27,950

hence, the amount that should be deposited is $27,950

Hence, the correct option is c. $27,950

We simply applied the above formula so that the correct value could come

And, the same is to be considered