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Math

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Jeff Associates borrowed $30,000. The company plans to set up a sinking fund that will repay the loan at the end of 8 years. Assume a 12 % interest rate compounded semiannually. What must Jeff pay into the fund each period of time?

  • Math - ,

    let P be the payment

    30000 = P(1.06^16 - 1)/.06

    solve for P

  • OOPS, (sorry Rick Perry) Math - ,

    that should have been

    30000 = P(1 - 1.06^-16)/.06

  • Math - ,

    $30,000
    End of 8 years
    12% interest

    8*2= 16 periods
    12/2= 6%

    Go to the table in your math procedures book and look under sinking fund table (Practical Business Math Procedures Jeffery Slater/ Sharon M. Whittry 12th edition Page 12.)

    table =.0390

    $30,000 * .0390= $1170.00

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