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

VerifiedAnswered 1 year ago

Answered 1 year ago

Step 1

1 of 3**Frist, lets find out the compounding period:**

Term of investment = 10 years

Semi annually compounding = 2

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

So, compounding period is 20 year

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