Answer to Question #210212 in Financial Math for tati

Question

The First Edition Book Store wants $60000 to upgrade its computer system in 3 years. The store can set up a sinking fund at 7%, compounded quarterly.

(a) What quarterly payment must be made to finance the fund?

(b) Construct a sinking fund schedule showing the periodic deposit, interest earned, increase in fund and accumulated fund.

(c) How much interest will the account accumulate?

(d) If the store’s management wants to withdraw the money after they have made the fourth deposits, how much would they have accumulated in the fund?