Need help setting up problem?
A state has $8000,000 worth of construction bonds that are due in 25 years. What annual sinking fund deposit is needed if the state can earn 10% per annum on its money?
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Need help setting up problem?
A state has $8000,000 worth of construction bonds that are due in 25 years. What annual sinking fund deposit is needed if the state can earn 10% per annum on its money?
You need to slow down on the questions.
You need a formula like so:
x*1.1^24 + x*1.1^23 (...) + x*1.1^0which equals
x*(1.1^24 (...) + x *1.1^0) = 8 000 000
which is x times the sum of an exponential series which is solved by the formula
S = (1.1^(24-1) - 1)/(1.1 - 1) = (1.1^23 - 1) / 0.1 = 1.1^23*10
x*S = x*1.1^23*10 = 8 000 000
x = 8 000 000 / (10 * 1.1^23)
*not sure about the S formula