EXAMPLE 9 Sinking Fund

Suppose that your parents had started saving for your college education when you were born. How much would they have had to save each month to accumulate $15,000 (to pay for tuition, room, and board for just your first year of college!) over 18 years, with an account earning a steady 5% per year, compounded monthly?

Applying the payment formula with , monthly rate , and , we get