A business must raise $57,000 in 5 years. What should be the size of the owners' quarterly payment to a sinking fund paying 8% compounded quarterly?

Name: A business must raise $57,000 in 5 years. What should be the size of the owners' quarterly payment to a sinking fund paying 8% compounded quarterly?
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Question

A business must raise $57,000 in 5 years. What should be the size of the owners' quarterly payment to a sinking fund paying 8% compounded quarterly? ​

Quizplus · Accepted Answer

The future value of a sinking fund formula is used: FV = Pmt * [(1 + r)^nt - 1] / r. Here, FV = $57,000, r = 0.08/4 = 0.02, n = 4, t = 5. Solving for Pmt gives approximately $2,345.93.

A Business Must Raise $57,000 in 5 Years