A sinking fund has a final value of 9000 with 7 interest co

A sinking fund has a final value of $ 9000, with 7% interest compounded monthly for 2 1/2 years. Determine the amount that was deposited in this sinking fund at the end of each period.

Solution

applying the formula to find monthly payments

A = P ( (1+r)^n-1/r )

plugging the values in the formula

9000 = P ( 1+ .07 / 12)^12*5/2 -1 )/.07/12)

9000 = P ( 1+ .07/12)^30 -1 / .07/12)

P = 9000 / ( 1+ .07/12)^30 -1 / .07/12)

P = $ 275.40

therefore, $275.40 was deposited at the end of each period