Cargojet Corp. is preparing for the replacement of one of its jets in three years by making payments to a sinking fund at the beginning of every six months for the next three years. The fund earns 6% compounded semiannually, and the capital required in three years is $750,000. What is the size of the semiannual payment made to the sinking fund? __________ How much of the maturity value of the fund will be interest? __________ Construct a partial sinking fund schedule showing details of the first two and the last two payments and totals. Round the sinking fund payments, interest payments and increases in the fund to the nearest dollar.

Cargojet Corp. is preparing for the replacement of one of its jets in three years by making payments to a sinking fund at the beginning of every six months for the next three years. The fund earns 6% compounded semiannually, and the capital required in three years is $750,000. What is the size of the semiannual payment made to the sinking fund? How much of the maturity value of the fund will be interest? Construct a partial sinking fund schedule showing details of the first two and the last two payments and totals. Round the sinking fund payments, interest payments and increases in the fund to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

See similar textbooks

Similar questions

If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32 are made starting on December 31, 2020, that will deplete the fund, what is the interest rate being earned if interest is compounded annually?
2. Northern Flying Science is preparing to buy an aircraft estimated to cost $600,000 by making equal payments at the end of every three months into a sinking fund for five years. Interest earned by the fund is 8% compounded quarterly. a. What is the size of the quarterly payment made to the sinking fund? b. How much of the maturity value of the fund will be interest? c. What is the accumulated value of the fund after two years? d. How much interest will the fund earn in the 15th payment interval? Using BA II Plus Calculator
4. Luxury Yacht company is preparing to buy a new yacht estimated to cost $750000 by making equal payments at the end of every three months into a sinking fund for six years. Interest earned by the fund is 7.5% compounded quarterly. 3 (a) What is the size of the quarterly payment made to the sinking fund? (b) How much of the maturity value of the fund will be interest? (c) What is the accumulated value of the fund after two years? (d) How much interest will the fund earn in the 15th payment interval?
An engineering company expects to expand its plant facilities in 6 years at an estimated cost of $68,000. To provide for the expansion, a sinking fund has been established into which equal payments are made at the beginning of every 3 months. Interest is 10% compounded quarterly. (a) What is the size of the quarterly payment? (b) How much of the maturity value will be payments? (c) How much interest will the fund contain?
OPG has set up a fund to help pay the expenses for the monitoring of Pickering nuclear power plant once it is in safe storage. The balance in the fund today is $700 million, and it will earn interest at 7% compounded annually. Starting 10 years from now, $100 million will be withdrawn from the fund at the beginning of every year for 30 years. What is the annually compounded interest rate for the fund during the final 30 years? Select one: OA 0.72% OB.0.67% O C. 7% D. 4.33% E. 6.61% page
An investment project provides cash inflows of $1087 per year for eight years. What is the project payback period if the initial cost is $4653?
An investment project provides cash inflows of $3,000 per year for five years. What is the payback period if the project requires $5,000 at the beginning of the project?
Ipswich Corporation is considering an investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. Present value of an ordinary annuity of $1: 12% 13% 14% 15% 1 0.893 0.885 0.877 0.87 2 1.69 1.668 1.647 1.626 3 2.402 2.361 2.322 2.283 4 3.037 2.974 2.914 2.855 5 3.605 3.517 3.433 3.352 Present value of $1: 12% 13% 14% 15% 1 0.893 0.885 0.877 0.87 2 0.797 0.783 0.769 0.756 3 0.712 0.693 0.675 0.658 4 0.636 0.613 0.592 0.572 5 0.567 0.543 0.519 0.497
A computer equipment has an original cost of $650,000 with a scrap value of $50,000 at the end of eight years. What semi-annual payments must be set aside into a sinking fund to replace the equipment in eight years if the interest rate is 4% compounded semi-annually? Assume a 2% inflation rate.
A project requires an investment of $15,000 today and it is expected to generate free cash flows of $5,000 per year for the next four years. The company's weighted average cost of capital is 10.1% per year. What is the project's equivalent annual annuity? 1) $282.3 2) $233.7 3) $269.2 4) $257.7 5) $207.4
A start-up engineering company invested in a fund that promises 14% interest compounded monthly. It requires P4,000 end-of-month payments for the next 10 years. This fund can be withdrawn after 15 years. Assume that the investment occurs at time zero (now). What will be the equivalent fund value on the th 15 payment?
Your company estimates it will have to replace a piece of equipment at a cost of P5,800,000 in 5 years. To do this a sinking fund is established by making equal monthly payments at the beginning of each month into an account paying 6.6% compounded monthly. How much should each payment be?