# 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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