Air Canada is setting up a sinking fund to replace aircraft in 20 years. The fund is expected to accumulate $500,000,000 by making equal deposits at the end of every three months earning 7% compounded quarterly. By how much will the sinking fund grow during the 14^th year?

Question

Quizplus · Accepted Answer

The sinking fund grows by the interest earned on the accumulated amount and the new deposits made during the 14th year. The interest is calculated on the balance at the start of the year, and deposits are made quarterly. The correct calculation results in the fund growing by $29,457,474 during the 14th year.

Air Canada Is Setting Up a Sinking Fund to Replace