Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $23,767 to be accumulated in 5 years; quarterly payments of $1000. The interest rate needed is approximately%. (Type an integer or decimal rounded to two decimal places as needed.)
Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $23,767 to be accumulated in 5 years; quarterly payments of $1000. The interest rate needed is approximately%. (Type an integer or decimal rounded to two decimal places as needed.)
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
Related questions
Question
Transcribed Image Text:### Problem Statement
**Objective:** Determine the interest rate required for a sinking fund to accumulate a specified amount.
**Given:**
- Target amount: $23,767
- Time period: 5 years
- Payment frequency: Quarterly
- Payment amount: $1,000
**Task:** Find the interest rate (as a percentage) needed, assuming the compounding period coincides with the payment period.
**Instructions:** Enter the interest rate as an integer or a decimal, rounded to two decimal places, as needed.
### Explanation
A sinking fund is a fund established to accumulate a specific amount of money over time for a future investment or expense. In this problem, you need to find the interest rate that will allow quarterly payments of $1,000 to grow to a total of $23,767 in 5 years. You can calculate the required interest rate using financial formulas for sinking funds, often involving annuity formulas or a financial calculator.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Recommended textbooks for you
Advanced Engineering Mathematics
Advanced Math
ISBN:
9780470458365
Author:
Erwin Kreyszig
Publisher:
Wiley, John & Sons, Incorporated
Numerical Methods for Engineers
Advanced Math
ISBN:
9780073397924
Author:
Steven C. Chapra Dr., Raymond P. Canale
Publisher:
McGraw-Hill Education
Introductory Mathematics for Engineering Applicat…
Advanced Math
ISBN:
9781118141809
Author:
Nathan Klingbeil
Publisher:
WILEY
Advanced Engineering Mathematics
Advanced Math
ISBN:
9780470458365
Author:
Erwin Kreyszig
Publisher:
Wiley, John & Sons, Incorporated
Numerical Methods for Engineers
Advanced Math
ISBN:
9780073397924
Author:
Steven C. Chapra Dr., Raymond P. Canale
Publisher:
McGraw-Hill Education
Introductory Mathematics for Engineering Applicat…
Advanced Math
ISBN:
9781118141809
Author:
Nathan Klingbeil
Publisher:
WILEY
Mathematics For Machine Technology
Advanced Math
ISBN:
9781337798310
Author:
Peterson, John.
Publisher:
Cengage Learning,
