Question

A company estimates that it will need $139,000 in 18 years. if it eatablishes a sinking...

A company estimates that it will need $139,000 in 18 years. if it eatablishes a sinking fund hy making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each payment be?

The amount of each payment should be:??
(Round to the nearest cent)
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Answer #1
Future Value of an Ordinary Annuity
= C*[(1+i)^n-1]/i
Where,
C= Cash Flow per period
i = interest rate per period
n=number of period
$139000= C[ (1+0.0045)^216 -1] /0.0045
$139000= C[ (1.0045)^216 -1] /0.0045
$139000= C[ (2.6375 -1] /0.0045]
C =381.99
Monthly payment = $381.99
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