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Math Help - Sinking Fund - Compounded SemiAnnually

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    Sinking Fund - Compounded SemiAnnually

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

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  2. #2
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    Quote Originally Posted by ndcruz View Post
    Parents have set up a sinking fund in order to have $120,000 in 15 years for their childrenís 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:

    R=\frac{iS}{(1+i)^n-1}

    S = $120,000

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

    i = .068
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