Question on: SS3 Mathematics - Financial Arithmetic
A company wants to accumulate N5,000,000 in 5 years’ time to make a purchase. A sinking fund is established by making fixed monthly payments into an account paying 15% per annum compounded monthly. How much should each payment be?
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\[S = 5000000,\ i = \frac{0.15}{12} = 0.0125,\ n = 5 \times 12 = 60\]
\[R = \frac{5000000 \times 0.0125}{(1 + 0.0125)^{60} - 1}\]
\[R = \frac{5000000(0.0125)}{1.10718} = 56,449.72\]
\[R = N56,449.72\]
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