Question

A sinking fund is being established, the goal of which is to reach $100,000. Calculate the payment, where i is the interest rate per period. n = 22, i = .03

Answer 1

The payment is $60,240.96

Step-by-step explanation:

The formula of the future value of simple interest is:

A = P(1 + rn), where

• A is the future amount
• P is the initial payment
• r is the rate per period in decimal
• n is the number of periods

∵ The goal of the fund is to reach $100,000 ⇒ future value

∴ A = 100,000

∵ i is the interest per period and its value is 0.03 ⇒ interest rate

∴ r = 0.03

∵ The number of period is n and its value is 22

- Substitute A, r, and n in the rule above to find P

∴ 100,000 = P(1 + 0.03 × 22)

∴ 100,000 = P(1.66)

- Divide both sides by 1.66

∴ 60,240.96 = P

The payment is $60,240.96

Learn more:

You can learn more about interest in brainly.com/question/3614284

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