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15 September, 17:12

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

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  1. 15 September, 17:29
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    Initial deposit = $ 60,241 (Rounding to the next whole dollar)

    Step-by-step 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)
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