Solve the Application Problem

question 5

Multiple Choice

Solve the application problem. Round to the nearest cent.
-How much should be deposited semiannually into a sinking fund over 5 years to accumulate $ 159,000 if the money earns 8% compounded semiannually?

• A)$27,103.14
• B)$9,544.77
• C)$13,869.57
• D)$13,243.11

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Definitions:

Amortized

Refers to the process of gradually writing off the initial cost of an asset over a period.

Capitalized

Expenses or costs that are recorded as an asset on a balance sheet rather than an expense, to be amortized or depreciated over time.

Financial Lease

A financial lease is a lease agreement where the lessee assumes both the ownership risks and rewards of the leased asset, typically for its useful life.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically with lower monthly payments and shorter terms than a capital lease.