Question

You are paying into a sinking fund that earns 6%. If the payments are $15,000 per...

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?

Homework Answers

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
Please feel free to ask if anything about above solution in comment section of the question.
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