To provide for the automation of a production process in six years, Invista is starting asinking fund to accumulate $800,000 by the end of the six years. Round the sinking fundpayments and the periodic interest earnings to the nearest dollar. If the sinking fund earns6.4% compounded monthly, what month end payments should be made to the fund? Inwhat month will the fund pass the halfway point?

Amount required = $800,000Interest rate = 6.4% compounded monthlyNumber of years = 6To find:…

Answered: To provide for the automation of a…

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

Problem 1PS

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Complete the problems below. 1. A company will need $40,000 in four years for a new addition. To meet the goal, the company will deposit money into an account paying 6% annual interest, compounded monthly. How much should the company deposit each month in order to be able to pay for the addition? Looking at a couple of scenarios to compare to the initial investment (above): a. Exactly 20 months after the company begins their investment (above), they receive a payment from a settled lawsuit of $2000 that they immediately deposit into the account. If they continue, uninterrupted, with their monthly deposits, will the company be able to afford to add a skylight to the addition if the change order (the amount added to the original cost of $40,000) is $3000? If yes, how much, if any would be left over? If no, how much more money will they need? b. Suppose that instead of depositing the money monthly for five years, they decide to finance the addition (the original $40,000) for four years at…
Find the amount of each payment to be made into a sinking fund which earns 8% compounded quarterly and produces $49,000 at the end of 4.5 years. Payments are made at the end of each period. The payment size is $ . (Round to the nearest cent.)
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A building is expected to require $1,000,000 in capital improvement expenditures in five years (60 months). The building's net operating cash flow prior to that time is expected to be at least $20,000 at the end of every month. How much of that monthly cash flow must the owners set aside each month in order to have the money available for the capital improvements, assuming monthly interest rate is 1.5%? Group of answer choices $14,332.83 $13,609.73 $12,666.67 $10,393.43
Keeler's Fabrication sets aside $3500.00 at the beginning of every six months in a fund to replace equipment. If interest is 12% compounded monthly, how much will be in the fund after 3 years? The fund will be worth $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
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