   Chapter 12, Problem 17AT ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Solve the following exercises by using tables.Mary Evans plans to buy a used car when she starts college three years from now. She can make deposits at the end of each month into a 6% sinking fund account compounded monthly. If she wants to have $14,500 available to buy the car, what should be the amount of her monthly sinking fund payments? To determine To calculate: The amount of monthly sinking fund payment required by Mary Evans to buy a car of$14,500 after 3 years where payment frequency is 1 month at a nominal rate of return of 6% interest compounded monthly.

Explanation

Given Information:

Payment frequency is 1 month, time duration is 3 years, nominal rate of return is 6% and interest is compounded monthly and future value amount is $14,500. Formula used: The formula to compute the sinking fund payment is, Sinking fund payment=Future value of sinking fundFuture value table factor Calculation: Consider that payment frequency is 1 month, time duration is 3 years, nominal rate of return is 6% and interest is compounded monthly and future value amount is$14,500.

The rate period is 0.5%(6%÷12 period per year)

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