A corporation decides to deposit a fixed payment per quarter into an account earning 4% interest per year in order to create a sinking fund so they will have $121,000 to replace some machinery in 7 years. How much interest does the account earn in the third quarter of the fourth year?

A corporation decides to deposit a fixed payment per quarter into an account earning 4% interest per year in order to create a sinking fund so they will have $121,000 to replace some machinery in 7 years. How much interest does the account earn in the third quarter of the fourth year?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

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Question

A corporation decides to deposit a fixed
payment per quarter into an account earning
4% interest per year in order to create a
sinking fund so they will have $121,000 to
replace some machinery in 7 years. How
much interest does the account earn in the
third quarter of the fourth year?

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