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The management of a corporation anticipates a capital expenditure of $400,000 in 5 years for the purpose of purchasing replacement machinery. To finance this purchase, a sinking fund that earns interest a rate of 5%/year compounded quarterly will be set up. Determine the amount of each (equal) quarterly installment that should be deposited in the fund. (Assume that the payments are made at the end of e quarter Round your answer to the nearest cent)

The management of a corporation anticipates a capital expenditure of $400,000 in 5 years for the purpose of purchasing replacement machinery. To finance this purchase, a sinking fund that earns interest a rate of 5%/year compounded quarterly will be set up. Determine the amount of each (equal) quarterly installment that should be deposited in the fund. (Assume that the payments are made at the end of e quarter Round your answer to the nearest cent)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The management of a corporation anticipates a capital expenditure of $400,000 in 5 years for the purpose of purchasing replacement machinery. To finance this purchase, a sinking fund that earns interest at the rate of 5%/year compounded quarterly will be set up. Determine the amount of each (equal) quarterly installment that should be deposited in the fund. (Assume that the payments are made at the end of each quarter. Round your answer to the nearest cent.) $
Transcribed Image Text:The management of a corporation anticipates a capital expenditure of $400,000 in 5 years for the purpose of purchasing replacement machinery. To finance this purchase, a sinking fund that earns interest at the rate of 5%/year compounded quarterly will be set up. Determine the amount of each (equal) quarterly installment that should be deposited in the fund. (Assume that the payments are made at the end of each quarter. Round your answer to the nearest cent.) $
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