Sienna is planning a significant expansion in 5 years, but this time she does not want to
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Question:
Sienna is planning a significant expansion in 5 years, but this time she does not want to lease a building; she wants to build one. She started a Sinking Fund to accumulate the funds necessary for the project. It is estimated that $2,000,000 in today's dollars will be required; however, the inflation rate on construction costs and plant equipment is expected to average 5% per year for the next five years. Her investment will yield 8% compounded quarterly.
Use the compound interest concept to determine how much will be required for the project, taking inflation into account.
What will sinking fund payments be required at the end of every three months to accumulate the necessary funds?
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