Problema Solution
FInd the monthly payment, m, needed to have a sinking fund accumulate the future value, $18,000. The yearly interest rate it 6.7% and the number of payments is 18. Interest is compounded monthly. Round your answer to the nearest cent.
Answer provided by our tutors
S = $18,000 is the future value
r = 6.7% = 0.067 yearly interest rate
i = r/12 = 0.067/12 interest rate per month
n = 18 number of payment periods
R = m the monthly periodic payment
S = R[((1 + i)^n - 1)/i]
R = Si/((1 + i)^n - 1)
R = (18000*0.067/12)/((1 + 0.067/12)^18 - 1)
R = $953.38 rounded to the nearest cent
the monthly payment needs to be $953.38 to the nearest cent.