What is the amount of payment to be made in a sinking fund?

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What is the amount of payment to be made into a sinking fund so that the indicated amount will be there when needed. Round to the nearest cent. $8500 in 4 years, money earns 5.5% compounded annually, 4 annual payments

Nov 21st, 2015

Thank you for the opportunity to help you with your question!

You want to make $8500 in your account in 4 year,therefore you are looking for the future value of the payment.

We have to calculate the present value of the amount.

We have the formula as

Thus,$1958.53 must be made into the sinking fund.

Please rate my answer so that I can further help you in the future.Thanks
Nov 21st, 2015

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