A corporation creates a sinking fund in order to have $560,000 to replace some machinery in 9...
Question:
A corporation creates a sinking fund in order to have $560,000 to replace some machinery in 9 years.
a. How much should be placed in this account at the end of each quarter if the annual interest rate is 6.4% compounded quarterly? (Round your answers to the nearest cent.)
b. How much interest would they earn over the life of the account?
c. Determine the value of the fund after 2, 4, and 6 years.
Compound Interest
Compound interest is where the accumulated interest earned from an investment or loan's principal will also earned an interest. In an instance, you invested $1,000 with 10% interest, over the next period your interest earned which is equals to $100 will also generate an interest.
Answer and Explanation: 1
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View this answerIn this problem, given data are the following:
- Number of periods = 9 years
- Future value = 560,000
- Interest rate = 6.4%
- Frequency of payment = 4...
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