Suppose the total bond issue by Space Limited Company was $150 000 000 and they set up a sinking fund on December 22, 2021, for 20 years.

Sinking funds are accounts that companies establish to ensure certain amounts of money will be available at a given future date (refer to section 15.5 for information about sinking funds). If the rate of interest is 3.49 percent compounded semi-annually and they make annual end of year payments into the fund:

(a) What is the required annual end-of-year payment for Space Limited Company?

(b) Complete the following table for the Space Limited Company’s sinking fund for each of the payments shown:

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Interest Total Balance Payment Payment Earned on Numbers Amount Increase in Fund in Fund Fund 11 12 13