2 01 points Previous Answers WaneFMAC6 23008 My Notes Ask Y

2. 0/1 points | Previous Answers WaneFMAC6 2.3.008 My Notes Ask Your Te Find the periodic payments PMT necessary to accumulate he amount given in a sinking und·HINT See Example your answer to the nearest cent.) Assume en -o od e os ts an compounding the same intervals as deposit Round $20,000 in a fund paying 5% per year, with monthly payments for 10 years PMT= $ 128.85 1x Need Help? ReadIWatch Taik to a Tutor Submit Answer Save Progress Practice Another Version Talk to a Tutor

Solution

Since periodic payments are monthly, i take compounding to be monthly, too.
adjusting for periodicity, r = 0.05/12, n = 10*5 = 50
PMT = FV*r / ((1+r)^n - 1)

= 20,000*(0.05/12)/(( 1+0.05/12)^50 - 1)

= 83.33/ 0.23109 = $ 360.61