Thread: Sinking Fund - Compounded SemiAnnually

Parents have set up a sinking fund in order to have $120,000 in 15 years for their children’s college education. How much should be paid semiannually into an account paying 6.8% compounded semiannually?

Originally Posted by ndcruz

Parents have set up a sinking fund in order to have $120,000 in 15 years for their children’s college education. How much should be paid semiannually into an account paying 6.8% compounded semiannually?

I replace PMT (payment) with R and FV(Future Value) with S in my formula.

The periodic payment R required to accumulate a sum of S dollars over n periods with interest charged at the rate of i per period is:



S = $120,000

n = 30 (semi-annual periods in 15 yrs)

i = .068