The amount of $2,800 is deposited into a sinking fund at the end of every semi-annual period for 5 years....

Question

1. The amount of $2,800 is deposited into a sinking fund at the end of every semi-annual period for 5 years. Assume the interest rate is 7.5% compounded semi-annually.
What is the account balance after 1 year?

SnapAndSolve AI · Accepted Answer

To find the account balance after 1 year, we need to calculate the future value of the deposits made at the end of each semi-annual period, compounded semi-annually at 7.5% per annum (or 3.75% per semi-annual period).

First deposit: $2,800, compounded for 1 period at 3.75%:
Future Value = $2,800 * (1 + 0.0375) = $2,905
Second deposit: $2,800, no interest as it is just deposited at the end of the year.

Total account balance after 1 year = $2,905 + $2,800 = $5,705.

Answer: $5,705

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The amount of $2,800 is deposited into a sinking fund at the end of every semi-annual period for 5 years....

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