Question 1173717: A major city wants to establish a sinking fund to pay off debts of PKR 800 million which come due in 10 years. The city can earn interest at the rate of 8 percent per year compounded monthly. If first deposit is made 1 month from now;
1)What monthly deposit will be required to accumulate the PKR 800 million?
2)How much interest will be earned on these deposits
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! use the financial calculator found at
the inputs to this calculator are:
pv = 0
fv = 800,000,000
ir = 8/12 = .666666666...%
payment at end of time period
click on pmt to get:
payment required at the end of each month is 4,372,874.22.
multiply that by 120 payments to get:
total amount of payments is 524,744,905.8
total interest earned 800,000,000 minus that = 275,255,094.60.
here are the results from using that calculator.
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