Find the interest rate needed for the sinking fund to reach the required amount. assume that the compounding period is the same as the payment period.? (note. a sinking fund is an account created to fund a future expense.? it's like a savings? account) ? $27 comma 456 to be accumulated in 5 ? years; quarterly payments of ? $1225

so rate is 4.72 %

Step-by-step explanation:

Given data

time (t) = 5 year  = 5×4 = 20 quarterly

amount = $27456

principal = $1225

to find out

interest rate (r)

solution

we use here amount formula that is

amount = principal ( -1 ) / r      .....................1

put all value principal , amount and time in equation 1 and we get rate

rate is r/4 because it is quarterly payment

amount = principal ( -1 ) / r/4

27456 = 1225 ( -1 ) / r/4

( -1 ) / r/4  = 27456/ 1225

( -1 ) / r  = 27456/ (1225 × 4)

( -1 ) = r 27456/ (1225 × 4)

now by the tvm solver and amount  $27456

graph value

we get r = 0.0472

so rate is 4.72 %

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