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Aleksandr
1 month ago
13

Your company wants to set aside a fixed amount every year to a sinking fund to replace a piece of industrial equipment costing $

375,000 at the end of eight years from now. The sinking fund is expected to earn 7% interest. How much must your company deposit each year to meet this goal?
Business
1 answer:
Katen [3.5K]1 month ago
4 0
To accumulate $375,000 by the eighth year, the company needs to make eight yearly deposits earning 7% interest, with each deposit amounting to $34,874.16. To compute this, using an Excel spreadsheet with the Solver add-in is optimal. In a table spanning 8 years, arrange the payments following the interest rule: payment year 1*(1+7%)^8 + payment year 2*(1+7%)^7 +..., until payment year 8*(1+7%)^1, ensuring all payments remain equal.
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