Question: XXXX Contractors are preparing to replace critical earthmoving plants and equipment so that they can consolidate future bids. The anticipated cost of the digger with

XXXX Contractors are preparing to replace critical earthmoving plants and equipment so that they can consolidate future bids. The anticipated cost of the digger with a maximum-sized bucket is 85,000. It needs to be bought in 4 years time. However, the industrial development fund is willing to loan XXXX contractors at a rate of 12% per annum if they can purchase the digger today. The accountant thinks there is a possibility of outright purchase of the digger in 4 years time if the company can create a sinking fund at a rate of 6% per annum

Task: Calculate the amount of money XXXX Contractors should reserve (sinking fund) per year for it to make an outright purchase, as proposed by the accountant

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