Question

Find the amount of the payment needed into a sinking fund.

Amount Needed Years Until Needed Interest Rate Interest Compounded Amount of Payment
$250,000 10 8% semiannually

Solution

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Answered 1 year ago
Answered 1 year ago
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Frist, lets find out the compounding period:

Term of investment = 10 years

Semi annually compounding = 2

Compounding period=Term of investment×Semi annually compounding=10×2=20years\begin{align*} \text{Compounding period} &= \text{Term of investment} \times \text{Semi annually compounding}\\[7pt]&= 10 \times 2\\[7pt] &= \text{20years} \end{align*}

So, compounding period is 20 year

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