Can someone please just give me the right answer to the right decimal places for the last part, "How much interest was earned during the third quarter of the 4th year?" I've received more than 5 wrong answers already.  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?$264439.07 $  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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Can someone please just give me the right answer to the right decimal places for the last part, "How much interest was earned during the third quarter of the 4th year?" I've received more than 5 wrong answers already. 

 

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?
$264439.07
$

 

 

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

Future Value = $860,000

Interest Rate = 6.5%

Interest Rate during a Period = 6.5% ÷ 4 = 1.625%

Type of Interest Compounded = Quarterly

Number of Payment in a Year = 4

Time Period = 11 Years

Time to Maturity = 11 × 4 = 44

 

Calculation of Investment in each quarter using excel:

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Interest Rate Investment in each Period Future Value x (1+Interest Rate) -1 1.625% = $860,000x- (1+1.625%) -1 0.01625 =$860,000x (1.01625) -1 0.01625 $860,000x- 2.032472034-1 0.01625 $860,000x 1.032472034 $860,000x 0.015738925 $13,535.47558274

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Step 2

Calculation of Value of the fund after 2, 4 and 6 years using FV function of excel:

To open the "FV function" window - MS-Excel --> Formulas --> Financials --> FV.

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=FV FV(rate, nper, pmt, [pv), [type]) A Value 1 Particulars 2 Interest Rate (rate) 3 Number of Payment in a Year 4 Investment in Each Quarter (pmt) 5 Value of Fund after 2 Years 0.01625 4 13535.47558274 =FV(B2,2 B3, B4) |=FV(B2,4*B3,-B4) |=FV(B2,6*B3, B4) 6 Value of Fund after 4 Years 7 Value of Fund after 6 Years

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Step 3

The result of above tabl...

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A Value 1 Particulars 2 Interest Rate (rate) Number of Payment in a Year 4 Investment in Each Quarter (pmt) 5 Value of Fund after 2 Years 6 Value of Fund after 4 Years 7 Value of Fund after 6 Years 1.625% $13,535.48 $114,646.72 $245,073.30 $393,451.66

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