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3 January, 16:23

Claudine Corporation will deposit $5,000 into a money market sinking fund at the end of each year for the next five years. How much will accumulate by the end of the fifth and final payment if the sinking fund earns 9% interest?

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  1. 3 January, 17:35
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    Claudine Corporation will accumulate 32616,67

    Explanation:

    The formula of interest is A=P (1+r) ⁿ

    A=Final amount

    P = Principal (deposit)

    r = interest rate

    n = time

    Claudine Corporation will make 5 deposits, 1 per year. We are going to calculate how much will be accumulate per year:

    A 1 year = 5000 (1+0,09) ⁵=7693,12

    A 2 year = 5000 (1+0,09) ⁴=7057,90

    A 3 year = 5000 (1+0,09) ³=6475,15

    A 4 year = 5000 (1+0,09) ²=5940,5

    A 5 year = 5000 (1+0,09) ¹=5450

    Total amount=7693,12 + 7057,90 + 6475,15 + 5940,5 + 5450 = 32616,67
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