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Find the amount of each payment to be made into a sinking fund which earns 5% compounded quarterly and produces $32,000 at the end of 2.5 years. Payments aremade at the end of each period.The payment size is $(Do not round until the final answer. Then round to the nearest cent.)

Answer :

We have to use the following formula

[tex]FV=PMT(\frac{(1+i)^n}{i})[/tex]

Where FV = 32,000, i = 0.05, and n = 7.5.

[tex]\begin{gathered} 32000=\text{PMT(}\frac{(1+0.05)^{7.5}}{0.05}\text{)} \\ PMT\approx1,109.69 \end{gathered}[/tex]

Therefore, the payment after each period is $1,109.69.

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