Answer to Question #118018 in Financial Math for Itumeleng

Question

A sinking fund is established to raise R50000 in ten years time. The fund must also make provision for withdrawals of R800 every half year starting 6 months from now and finishing 3 and half years from now. The one hundred amd twenty monthly payments that must be made over the ten years period into an account paying 6.3%p.a compounded half yearly are equal to?

Answer 1

1.$50000+3.5\times2\times800=55600$

total amount for the formation of a sinking fund 

2.find monthly payment

$FVA=A\times\frac{(1+r)^n-1}{r}$

​$55 600=A\times\frac{(1+0.00525)^{120}-1}{0.00525}$

A=333.78