SOLUTION: A sinking fund is established to discharge a debt of R30 000 in 25 yrs if deposits are made at the end of each 6month period and interest is paid at the rate of 9%compounded se

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Question 1131415: A sinking fund is established to discharge a debt of R30 000 in 25 yrs if deposits are made at the end of each 6month period
and interest is paid at the rate of 9%compounded semiannually what is the amount of each deposit

Answer by greenestamps(13200) About Me  (Show Source):
You can put this solution on YOUR website!


Standard sinking fund (future value annuity) problem.

payment amount: x
future value: 30000
periodic interest: 4.5% = .045
number of periods: 25*2 = 50

30000+=+x%28%281.045%5E50-1%29%2F.045%29
30000+=+x%28178.503%29
x+=+30000%2F178.503+=+168.06 to 2 decimal places.

ANSWER: the required deposit amount is $168.06