Expert: Steve Holleran - 9/10/2007

Question
find the amount of this payment made into a sinking fund to accumulate the following amount. payments are made at the end of each period.

$25000, money earns 9% compounded quarterly for 3 1/2 years

Answer
Hi Raymond,

Sorry about the delay--I just started a new job and got a little distracted.

The formula you need is

             FV = P * [(1 + i)^n -1] / i

where FV = value
       P = payment
       i = int rate per period; here i = .09/12 = .0075
       n = number of periods

So, we have :       25000 = P * [(1.0075)^42 - 1] / .0075

If you calculate all the stuff on the right, you get

                  49.153

So then , P = 25000/ 49.153 = about 508  (508.62 exactly)

So I think this is the amount you want.

Again, sorry it took me so long.
Steve Holleran