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.
How much interest was earned during the third quarter of the 4th year?
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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.
Formula used to calculate amount that is compounded quarterly is:
Now substitute the value...
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