Sinking fund which the goal of $100,000 to reach with n=22, i= 0.
03
To calculate the sinking fund amount needed to reach a goal of $100,000 with 22 periods and an interest rate of 0.03, follow these steps:
Step 1: Calculate the periodic interest rate:
The periodic interest rate is the annual interest rate divided by the number of periods in a year. In this case, the annual interest rate is 0.03 and the number of periods is 22. Therefore, the periodic interest rate would be (0.03/22).
Step 2: Calculate the sinking fund factor:
The sinking fund factor is a value used to multiply the periodic deposit amount to reach the desired goal. It is calculated using the formula:
Sinking Fund Factor = (1 + r)^n - 1 รท r
where r is the periodic interest rate and n is the total number of periods. In this case, r would be (0.03/22) and n would be 22.
Step 3: Calculate the sinking fund amount:
To calculate the sinking fund amount, multiply the desired goal by the sinking fund factor:
Sinking Fund Amount = Desired Goal x Sinking Fund Factor
In this case, the desired goal is $100,000 and the sinking fund factor is calculated in Step 2.
By following these steps, you will be able to calculate the sinking fund amount needed to reach a goal of $100,000 with 22 periods and an interest rate of 0.03.