Chapter 12.III, Problem 9TIE

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Big Sky Ski Rental Center will need $40,000 in 6 years to replace aging equipment. What sinking fund payment is required at the end of each month at *6%* interest compounded monthly to amount to the $40,000 in 6 years?

To determine

**To calculate:** The amount of sinking fund payment required by Big Sky Ski Rental Center to replace aging equipment at the end of each month at

Explanation

**Given Information:**

Big Sky Ski Rental Center replaces aging equipment at the end of each month at

**Formula used:**

The formula to compute the sinking fund payment is:

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

**Calculation:**

Consider that payment frequency is

The rate period is

The number of periods is

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