Question

Jeannie plans to deposit $6,000 in a money market sinking fund at the end of each year for the next four years. What is the amount that will accumulate by the end of the fourth and final payment if the sinking fund earns 9% interest

Answer 1

Answer:

$27,439

Explanation:

Calculation for the amount that will accumulate by the end of the fourth and final payment

First step is to find the FV of an ordinary annuity of $1 using the table

FV=?

Number of years= 4

interest= 9%

Hence,

FV of of an ordinary annuity of $1 =4.5731

Now let calculate the that will accumulate by the end of the fourth and final payment

End of the fourth and final payment Accumulated amount = $6,000 × 4.5731

End of the fourth and final payment Accumulated amount = $27,439

Therefore the amount that will accumulate by the end of the fourth and final payment will be $27,439