Question

You are paying into a sinking fund that earns 6%. If the payments are $15,000 per year, how much will be in the fund in 15 years?

Answer 1

Solution:
	Fund in Sinking fund in 15 years	349,139.55
Working Notes:
	Fund will you have in the account in 1n years is the future value of annuity of $15,000 @ rate 6 % interest.
	Future value of annuity = P x ((1+i)^n - 1)/i
	P= payments deposits per year =$15,000
	i=interest rate = 6%=0.06
	n= no. Of years= 15 Year
	Future value of annuity at t=15 = P x ((1+i)^n - 1)/i
	Future value of annuity at t=15 = 15000 x ((1+0.06)^15 - 1)/0.06
	Future value of annuity at t=15 = $349,139.5483
	Future value of annuity at t=15 = $349,139.55
Hence	Fund in Sinking fund in 15 years	349,139.55
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