Chapter 12.III, Problem 13RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Solve the following exercises by using tables.

Green Thumb Landscaping buys new lawn equipment every 3 years. It is estimated that $25,000 will be needed for the next purchase. The company sets up a sinking fund to save for this obligation.

a. What equal payments must be deposited every 6 months if interest is 8% compounded semiannually?

b. What is the total amount of interest earned by the sinking fund?

**(a)**

To determine

**To calculate:** The amount of sinking fund payment required to be deposited at the end of every

Explanation

**Given Information:**

Payment frequency is

**Formula used:**

The formula to compute the sinking fund payment is,

**Calculation:**

Consider that Payment frequency is

The rate period is

The number of periods is

**(b)**

To determine

**To calculate:** The amount of total interest where fund payment required to be deposited at the end of every

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