Mechanic's Hardware needs to accumulate $41,000 in 3 years to purchase new equipment. What sinking fund payment would they need to make at the END of each month, at 6% interest compounded monthly? (Use Table 12-1 from your text)
A) $2,111.35
B) $1,885.21
C) $1,042.30
D) $1,399.56

Question

Quizplus · Accepted Answer

The sinking fund payment can be calculated using the future value of an ordinary annuity formula. Given the future value, interest rate, and time period, the correct monthly payment is $1,042.30.

Mechanic's Hardware Needs to Accumulate $41,000 in 3 Years to Purchase