   Chapter 12, Problem 29AT ### 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

# Sinking fund payment Sinking Fund Payment Time Nominal Interest Future Value Payment Frequency Period (years) Rate (%) Compounded (Objective) 29. every years 4 3.7 annually $25,000 To determine To calculate: The amount of sinking fund payment where payment frequency is 1 the year, the time duration in 4 years, the nominal rate of return is 3.7%, future value is$25,000 and interest is compounded annually.

Explanation

Given Information:

Payment frequency is 1 the year, the time duration in 4 years, the nominal rate of return is 3.7%, future value is $25,000 and interest is compounded annually. Formula used: The formula to compute the sinking fund payment is, Sinking fund payment=FV×i(1+i)n1 Here FV is the future value, i is the interest rate per period (nominal rate ÷ periods per year) and n is the number of periods (years × periods per year). Calculation: Consider that Payment frequency is 1 the year, the time duration in 4 years, the nominal rate of return is 3.7%, future value is$25,000 and interest is compounded annually.

The rate period is 3.7% or 0.037(3.7%÷1 period per year).

The number of periods is 4(4 years×1 period per year)

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