Question 1071790: Can someone please help me! I don't understand thank you!
Problem:
Find the periodic payments PMT necessary to accumulate $40,000 in a sinking fund that pays 7% per year, with monthly payments for 5 years (assume monthly compounding).
Answer by MathTherapy(10552)   (Show Source):
You can put this solution on YOUR website!
Can someone please help me! I don't understand thank you!
Problem:
Find the periodic payments PMT necessary to accumulate $40,000 in a sinking fund that pays 7% per year, with monthly payments for 5 years (assume monthly compounding).
The formula for the PAYMENT, per period, to an ORDINARY ANNUITY should be used.
This is EITHER:  OR  , where:
 = Monthly Payment (Unknown, in this case)
 = The future value in the amount of time (years), or the amount that will be available then ($40,000, in this case)
 = Interest rate, per year (7%, or .07, in this case)
 = Number of compounding periods per year (monthly, or 12, in this case)
 = Time, in years, the money is invested (5, in this case)
Each MONTHLY payment or 
|
|
|
