Question

A corporation creates a sinking fund in order to have $610,000 to replace some machinery in 11 years. How much should be placed in this account at the end of each quarter if the annual interest rate is 4.9% compounded quarterly? (Round your answers to the nearest cent.)

$10544.14  

How much interest would they earn over the life of the account?
$   146057.84

Determine the value of the fund after 2, 4, and 6 years.

2 years		$  88059.78
4 years		$  185128.62
6 years		$ 292128.22

How much interest was earned during the fourth quarter of the 7th year?

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i cant figure out the last part. im using the Ti-84 finance application so please show me how to use it on that

Answer 1

Part 4

Here we will first calculate the balance in sinking fund at the end of 3^rd quarter of 7^th year:

N = 27

R= 4.9%/4 = 1.225%

Pmt = 10544.14

FV = pmt x FVIFA (27,1.225%)

   = 10544.14 x 31.772847

   = 335017.35

Amount of interest earned during the 4^th quarter of year 7:

Interest = Balance at the end of 3^rd quarter of 7^th year x quarterly interest rate x no. of quarters

               = 335017.35 x 1.225% x 1

              = $4103.96

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