Question

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

Answer 1

$60,241

Explanation:

Answer 2

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)