Paul and Donna Kelsch are planning a Mediterranean cruise in 3 years and will need $6,500 for the trip. They decide to set up a "sinking fund" savings account for the vacation. They intend to make regular payments at the end of each 3 month period into the account that pays 6% interest compounded quarterly. What periodic sinking fund payment (in $) will allow them to achieve their vacation goal?
Paul and Donna Kelsch are planning a Mediterranean cruise in 3 years and will need $6,500 for the trip. They decide to set up a "sinking fund" savings account for the vacation. They intend to make regular payments at the end of each 3 month period into the account that pays 6% interest compounded quarterly. What periodic sinking fund payment (in $) will allow them to achieve their vacation goal?
Accounting (Text Only)
26th Edition
ISBN:9781285743615
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 14.20EX
Related questions
Question
Solve by using tables Table 12-1 and Table 12-2.
Paul and Donna Kelsch are planning a Mediterranean cruise in 3 years and will need $6,500 for the trip. They decide to set up a "sinking fund" savings account for the vacation. They intend to make regular payments at the end of each 3 month period into the account that pays 6% interest compounded quarterly. What periodic sinking fund payment (in $) will allow them to achieve their vacation goal? (Round your answer to the nearest cent.)
$
Transcribed Image Text:TABLE 12-1 Future Value (Amount) of an Ordinary Annuity of
Periods
1%
1%
2%
3%
4%
5%
6%
7%
8%
Periods
1.00000 1.00000 1.00000
1.00000 1.00000
1.00000 1.00000
1.00000
1.00000
1.00000
1
2
2.00500 2.01000 2.01500
2.02000 2.03000
2.04000 2.05000 2.06000
2.07000
2.08000
3
3.01502
3.03010
3.04522
3.06040 3.09090
3.12160
3.15250
3.18360
3.21490
3.24640
3
4
4.03010
4.06040
4.09090 4.12161
4.18363
4.24646
4.31013
4.37462
4.43994
4.50611
4
5.05025
5.10101
5.15227
5.20404 5.30914
5.41632
5.52563
5.63709
5.75074
5.86660
6.07550
6.15202
6.22955
6.30812 6.46841
6.63298
6.80191
6.97532
7.15329
7.33593
6.
7
7.10588
7.21354
7.32299
7.43428
7.66246
7.89829
8.14201
8.39384
8.65402
8.92280
7.
8.14141
8.28567
8.43284
8.58297 8.89234
9.21423
9.54911
9.89747
10.25980
10.63663
8
9
9.18212
9.36853
9.55933 9.75463 10.15911 10.58280 11.02656 11.49132 11.97799
12.48756
9
10
10.22803 10.46221 10.70272 10.94972 11.46388 12.00611 12.57789 13.18079 13.81645
14.48656
10
11
11.27917 11.56683 11.86326 12.16872 12.80780 13.48635 14.20679 14.97164
15.78360
16.64549
11
12
12.33556
12.68250 13.04121 13.41209 14.19203 15.02581 15.91713 16.86994
17.88845
18.97713
12
13
13.39724 13.80933 14.23683 14.68033 15.61779 16.62684 17.71298 18.88214 20.14064
21.49530
13
14
14.46423 14.94742 15.45038 15.97394 17.08632 18.29191 19.59863 21.01507
22.55049
24.21492
14
15
15.53655 16.09690 16.68214 17.29342 18.59891 20.02359 21.57856 23.27597
25.12902
27.15211
15
16
16.61423 17.25786 17.93237 18.63929 20.15688 21.82453 23.65749 25.67253 27.88805
30.32428
16
17
17.69730 18.43044 19.20136 20.01207 21.76159 23.69751 25.84037 28.21288 30.84022
33.75023
17
18
18.78579 19.61475 20.48938 21.41231 23.41444 25.64541 28.13238 30.90565
33.99903
37.45024
18
19
19.87972 20.81090 21.79672 22.84056 25.11687 27.67123 30.53900 33.75999
37.37896
41.44626
19
20
20.97912 22.01900 23.12367 24.29737 26.87037 29.77808 33.06595 36.78559
40.99549
45.76196
20
21
22.08401 23.23919 24.47052 25.78332 28.67649 31.96920 35.71925 39.99273
44.86518
50.42292
21
22
23.19443 24.47159 25.83758 27.29898 30.53678 34.24797 38.50521 43.39229
49.00574
55.45676
22
23
24.31040 25.71630 27.22514 28.84496 32.45288 36.61789 41.43048 46.99583 53.43614
60.89330
23
24
25.43196 26.97346 28.63352 30.42186 34.42647 39.08260 44.50200 50.81558
58.17667
66.76476
24
25
26.55912 28.24320 30.06302 32.03030 36.45926 41.64591 47.72710 54.86451
63.24904
73.10594
25
26
27.69191 29.52563 31.51397 33.67091 38.55304 44.31174 51.11345 59.15638 68.67647
79.95442
26
27
28.83037 30.82089 32.98668 35.34432 40.70963 47.08421 54.66913 63.70577
74.48382
87.35077
27
28
29.97452 32.12910 34.48148 37.05121 42.93092 49.96758 58.40258 68.52811
80.69769
95.33883
28
29
31.12439 33.45039 35.99870 38.79223 45.21885 52.96629 62.32271 73.63980 87.34653 103.96594
29
30
32.28002 34.78489 37.53868 40.56808 47.57542 56.08494 66.43885 79.05819
94.46079 113.28321
30
31
33.44142 36.13274 39.10176 42.37944 50.00268 59.32834 70.76079 84.80168 102.07304 123.34587
31
32
34.60862 37.49407 40.68829 44.22703 52.50276 62.70147 75.29883 90.88978 110.21815 134.21354
32
33
35.78167 38.86901 42.29861 46.11157 55.07784 66.20953 80.06377 97.34316 118.93343 145.95062
33
34
36.96058 40.25770 43.93309 48.03380 57.73018 69.85791 85.06696 104.18375 128.25876 158.62667
34
35
38.14538 41.66028 45.59209 49.99448 60.46208 73.65222 90.32031 111.43478 138.23688 172.31680
35
36
39.33610 43.07688 47.27597 51.99437 63.27594 77.59831 95.83632 119.12087 148.91346 187.10215
36
(1 + i)" – 1
The values in Table 12-1 were generated by the formula
rate per period and n is the total number of periods.
and rounded to five decimal places, where i is the interest
i
Transcribed Image Text:TABLE 12-2 Present Value (Amount) of an Ordinary Annuity of $1
Periods
1%
2%
3%
4%
5%
6%
7%
8%
Periods
1
0.99502 0.99010
0.98522
0.98039
0.97087
0.96154
0.95238
0.94340
0.93458 0.92593
1.98510 1.97040
1.95588
1.94156
1.91347
1.88609
1.85941
1.83339
1.80802
1.78326
2
3.
2.97025 2.94099
2.91220
2.88388
2.82861
2.77509
2.72325
2.67301
2.62432
2.57710
3
4
3.95050 3.90197
3.85438
3.80773
3.71710
3.62990
3.54595
3.46511
3.38721
3.31213
4
4.92587 4.85343
4.78264
4.71346
4.57971
4.45182
4.32948
4.21236
4.10020
3.99271
5
6.
5.89638 5.79548
5.69719
5.60143
5.41719
5.24214
5.07569
4.91732
4.76654
4.62288
6.
7
6.86207
6.72819
6.59821
6.47199
6.23028
6.00205
5.78637
5.58238
5.38929
5.20637
7
8
7.82296 7.65168
7.48593
7.32548
7.01969
6.73274
6.46321
6.20979
5.97130 5.74664
8.
9.
8.77906 8.56602
8.36052
8.16224
7.78611
7.43533
7.10782
6.80169
6.51523
6.24689
9
10
9.73041 9.47130
9.22218
8.98259
8.53020
8.11090
7.72173
7.36009
7.02358
6.71008
10
11
10.67703 10.36763 10.07112
9.78685
9.25262
8.76048
8.30641
7.88687
7.49867
7.13896
11
12
11.61893 11.25508 10.90751
10.57534
9.95400
9.38507
8.86325
8.38384
7,94269
7.53608
12
13
12.55615 12.13374 11.73153
11.34837 10.63496
9.98565
9.39357
8.85268
8.35765
7.90378
13
14
13.48871 13.00370 12.54338 12.10625 11.29607 10.56312
9.89864
9.29498
8.74547
8.24424
14
15
14.41662 13.86505 13.34323 12.84926 11.93794 11.11839 10.37966
9.71225
9.10791
8.55948
15
16
15.33993 14.71787 14.13126 13.57771 12.56110 11.65230 10.83777 10.10590
9.44665
8.85137
16
17
16.25863 15.56225 14.90765 14.29187 13.16612
12.16567 11.27407 10.47726 9.76322
9.12164
17
18
17.17277 16.39827 15.67256 14.99203 13.75351 12.65930 11.68959 10.82760 10.05909
9.37189
18
19
18.08236 17.22601 16.42617 15.67846 14.32380 13.13394 12.08532 11.15812 10.33560
9.60360
19
20
18.98742 18.04555 17.16864 16.35143 14.87747 13.59033 12.46221 11.46992 10.59401 9.81815
20
21
19.88798 18.85698 17.90014 17.01121 15.41502 14.02916 12.82115 11.76408 10.83553 10.01680
21
22
20.78406 19.66038 18.62082 17.65805 15.93692 14.45112 13.16300 12.04158 11.06124 10.20074
22
23
21.67568 20.45582 19.33086
18.29220 16.44361
14.85684 13.48857 12.30338 11.27219 10.37106
23
24
22.56287 21.24339 20.03041
18.91393 16.93554 15.24696 13.79864
12.55036 11.46933 10.52876
24
25
23.44564 22.02316 20.71961 19.52346 17.41315 15.62208 14.09394 12.78336 11.65358 10.67478
25
26
24.32402 22.79520 21.39863 20.12104 17.87684 15.98277 14.37519 13.00317 11.82578 10.80998
26
27
25.19803 23.55961 22.06762 20.70690 18.32703 16.32959 14.64303 13.21053 11.98671 10.93516
27
28
26.06769 24.31644 22.72672 21.28127 18.76411
16.66306 14.89813 13.40616 12.13711 11.05108
28
29
26.93302 25.06579 23.37608 21.84438 19.18845 16.98371 15.14107 13.59072 12.27767 11.15841
29
30
27.79405 25.80771 24.01584 22.39646 19.60044 17.29203 15.37245 13.76483 12.40904 11.25778
30
31
28.65080 26.54229 24.64615 22.93770 20.00043 17.58849 15.59281
13.92909 12.53181 11.34980
31
32
29.50328 27.26959 25.26714 23.46833 20.38877
17.87355 15.80268 14.08404 12.64656 11.43500
32
33
30.35153 27.98969 25.87895 23.98856 20.76579 18.14765 16.00255 14.23023 12.75379 11.51389
33
34
31.19555 28.70267 26.48173
24.49859 21.13184 18.41120 16.19290 14.36814 12.85401 11.58693
34
35
32.03537 29.40858 27.07559 24.99862 21.48722 18.66461 16.37419 14.49825 12.94767 11.65457
35
36
32.87102 30.10751 27.66068 25.48884 21.83225 18.90828 16.54685 14.62099 13.03521 11.71719
36
(1 + i)" – 1
and rounded to five decimal places, where i is the interest
The values in Table 12-2 were generated by the formula
rate per period and n is the total number of periods,
i(1 + i)"
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting (Text Only)
Accounting
ISBN:
9781285743615
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Accounting (Text Only)
Accounting
ISBN:
9781285743615
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning