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Find the monthly payment, R, needed to have a sinking fund accumulate the future value, A. The
yearly interest rate, r, and the number of payments, n, are given. Interest is compounded
monthly. Use the formula for finding the future value of an ordinary annuity. A = $10,000 R=5%
n=36
Solution
FV = P[{(1 + r)n - 1}/r]
P = (FV x r)/[(1 + r)n - 1]
= ($10,000 x 0.05/12)/[(1 + 0.05/12)36 - 1]
= $41.67/[(1.1615 - 1)] = $41.67/0.1615 = $258.04

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Find the monthly payment, R, needed to have a sinking fund accumulat.pdf

  • 1. Find the monthly payment, R, needed to have a sinking fund accumulate the future value, A. The yearly interest rate, r, and the number of payments, n, are given. Interest is compounded monthly. Use the formula for finding the future value of an ordinary annuity. A = $10,000 R=5% n=36 Solution FV = P[{(1 + r)n - 1}/r] P = (FV x r)/[(1 + r)n - 1] = ($10,000 x 0.05/12)/[(1 + 0.05/12)36 - 1] = $41.67/[(1.1615 - 1)] = $41.67/0.1615 = $258.04