John brought a stamp for his collection. He agreed to pay a lump sum of $4000 after 5 years. Until then, he pays 6% simple interest semiannually on the $4000.(adsbygoogle = window.adsbygoogle || []).push({});

a) Find the amount of each semiannual interest payment.

b) John sets up a sinking fund so that enought money will be present to pay off the $4000. He will make annual payments into the fund. the accound pays 8% compounded annually. Find the amound of each payment.

a)

is it m=2

n=5x2=10

i=0.06/2=0.03

P=4000

and sub in A=P(1+i)^n

and then solve for A

interest=A-P

therefore A-4000

so the interest is $1374.67???

b) i found that the amount of each payment is $681.83????

I am not really sure about my answers.

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# Homework Help: Sinking Fund

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