Jon wishes to accumulate $4,500 in 8 years for a long vacation. Use Table 12-1 from your text to find the sinking fund payment he would need to make at the END of every six months, at 4% interest compounded semiannually.

Question

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The future value of the sinking fund is $4,500, the interest rate is 4% compounded semiannually, and the time period is 8 years. Using Table 12-1, the sinking fund payment factor for 8 years at 4% compounded semiannually is 16.000. Therefore, the sinking fund payment is $4,500 / 16.000 = $281.25. Since the payments are made at the end of every six months, the semi-annual payment is $281.25 / 2 = $241.43.

Jon Wishes to Accumulate $4,500 in 8 Years for a Long