Question

8.

Howmet Corporation needs $200,000 in 5 years.
Find the required quarterly payment into a sinking fund if funds are invested in an account earning 10% per year compounded quarterly.


$38,050.00

$6,716.00

$32,760.00

$7,830.00

Answer 1

Fv=pmt [(1+r/k)^(kn)-1)÷(r/n)]

Fv = 200,000
r = 0.1
n = 5
k = 4 (quarterly)
Pmt=200,000÷(((1+0.10÷4)^(4×5)−1)÷(0.10÷4))=7,829.43