Question

Find the amount $5,000 required for sinking fund after 2years at 4% compounded monthly. What is the monthlypayment?

Answer 1

The formula is

Contribution = Money to accumulate * ( interest / (( interest +1) ^( frequency * period) -1)))

The rate is 4% per year so it is .04 /12 = .003333333

5000 * ( .0033333333 / ((.0033333333+1)^ (12*2) -1) )

200.45794

Rounding to the nearest cent

200.46 cents per month