sinking fund
S = N [ (1+r)^n - 1 ] /r
where r = .032
n = 10 years
N = 4,000
S = 4,000 [ (1.032)^10 -1 ]/.032
= 4000 [ 1.37 -1 ]/.032
= 4000 [ 11.57]
= 46280 so we got 6280 in interest
Finally, Kevin has a client who would like to invest into an account that earns 3.2% interest, which is compounded annually. The client opens the account with an initial deposit of $4,000, and deposits an additional $4,000 into the account each year thereafter.
How much money is in the account after the tenth deposit, assuming no withdrawals or other deposits were made?
1 answer
1 answer