A company estimates that it will need $66,000 in 10 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each payment be? The amount of each payment should be (Round to the nearest cent.)

A company estimates that it will need $66,000 in 10 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each payment be? The amount of each payment should be (Round to the nearest cent.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

14
A company estimates that it will need $66,000 in 10 years to replace a computer. If it establishes a sinking fund
by making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each
payment be?
The amount of each payment should be $
(Round to the nearest cent.)

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