Chapter 12.III, Problem 14RE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Solve the following exercises by using tables.

Paul and Donna Kelsch are planning a Mediterranean cruise in 4 years and will need $7,500 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 will allow them to achieve their vacation goal?

To determine

**To calculate:** The amount of sinking fund payment required to achieve the vacation goals of Paul and Donna in

Explanation

**Given Information:**

Paul and Donna in

**Formula used:**

The sinking fund payment is calculated as follows:

Where, *FV* is the future value, *i* is the interest rate per period, *n* is the number of periods.

**Calculation:**

Consider that Paul and Donnaâ€™s payment frequency is

The rate period is

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