A company estimates that it will need $71,000 in 14 years to replace a computer. If...
A company estimates that it will need $71,000 in 14 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 4.2% compounded monthly, how much should each payment be?
The amount of each payment should be$
(Round to the nearest cent.)
Homework Answers
Monthly installment Formula:
where
E is EMI
P is Principal Loan Amount =71000
r is the rate of interest calculated on a monthly basis = 4.2%
n is loan term/tenure/duration in number of months = 14*12 = 168
So,
E = 71,000*0.042*(1+0.042)168/((1+0.042)168 - 1)
= 2982*1004.1/(1004.1-1)
= $2984.97
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