A corporation creates a sinking fund in order to have $860,000 to replace some machinery in 11 years. How much should be placed in this account at the end of each quarterif the annual interest rate is 6.5% compounded quarterly? (Round your answers to the nearest cent.)$ How much interest would they earn over the life of the account?$ Determine the value of the fund after 2, 4, and 6 years.2 years $4 years $6 years $How much interest was earned during the third quarter of the 4th year?$

Question
Asked Oct 22, 2019
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A corporation creates a sinking fund in order to have $860,000 to replace some machinery in 11 years. How much should be placed in this account at the end of each quarterif the annual interest rate is 6.5% compounded quarterly? (Round your answers to the nearest cent.)
$

How much interest would they earn over the life of the account?
$

Determine the value of the fund after 2, 4, and 6 years.

2 years   $
4 years   $
6 years   $


How much interest was earned during the third quarter of the 4th year?
$

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Expert Answer

Step 1

Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If you want remaining sub-parts to be solved, then please resubmit the whole question and specify those sub-parts you want us to solve.

Now come to the question:

According to the given question:

Amount (A) =$860,000

Time (t) =11 years

Rate of interest(r) =6.5%

It is needed to calculate the amount to be placed at the end of each quarter and the interest earned over the life of the account.

Step 2

Formula used to calculate amount that is compounded quarterly is:

4t
A P 1+
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4t A P 1+

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Step 3

Now substitute the value...

4f
A P 1+
4/11)
0.065
860000 P 1+ -
4
860000 P(1+0.01625)
860000 P(2.0325)
P $423124.2312
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4f A P 1+ 4/11) 0.065 860000 P 1+ - 4 860000 P(1+0.01625) 860000 P(2.0325) P $423124.2312

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Advanced Math