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Choi Home Repair needs to accumulate $22,000 in 6 years to purchase new equipment. What sinking fund payment (in $) would they need to make at the end of each three months, at 4% interest compounded quarterly?

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Answer: $815.62

Explanation:

This is an annuity because it is to be a specific payment per period.

As it is in 6 years, it is a Future Value calculation.

Number of periods = 6 years * 4 quarters = 24 quarters

Interest = 4%/ 4 quarters = 1%

Future Value = Annuity * Future Value interest factor of Annuity, 24 periods, 1%

22,000 = Annuity * 26.9735

Annuity = 22,000/26.9735

Annuity = $815.62

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