Question
QUESTION 4 John is opening a sinking fund at age 25 at 6% interest compounded monthly. He would like to have $250,000 at age 60
QUESTION 4
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John is opening a sinking fund at age 25 at 6% interest compounded monthly. He would like to have $250,000 at age 60 when he retires. Answer the questions below.
a) Use the appropriate formula in chapter 12 of your book to determine the necessary sinking fund payments John needs to make every month.
b) Determine the total amount of John's payments over those 35 years.
c) Determine the interest John earns during that period of 35 years.
After John retires, his $250,000 is amortized at 8% semiannually for 20 years.
d) Use the appropriate formula in chapter 12 of your book to determine the payment John receives every 6 months.
e) Determine the total amount John will receive from this account over that period of 20 years.
f) Determine the interest earned from this amortization.
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