Sometimes it makes better financial sense to put small amounts of money away over time to purchase a large item instead of taking out a loan with a high interest rate. When looking at depositing money...Sometimes it makes better financial sense to put small amounts of money away over time to purchase a large item instead of taking out a loan with a high interest rate. When looking at depositing money into a savings account on a periodic basis we need to use the savings plan formula.
\(F\cdot \dfrac{\left(\dfrac{r}{m}\right)}{\left[\left( 1+\dfrac{r}{m}\right)^{m t}-1\right]}=PMT \dfrac{\left[\left( 1+\dfrac{r}{m}\right)^{m t}-1\right]}{\left(\dfrac{r}{m}\right)}\cdot {\dfrac{\lef...F⋅(rm)[(1+rm)mt−1]=PMT[(1+rm)mt−1](rm)⋅(rm)[(1+rm)mt−1] The business needs to deposit $18,063.90 at the end of each quarter for 5 years into a sinking fund earning 9% interest compounded quarterly in order to have $450,000 at the end of 5 years.
