The Harrow Board of Education financed the acquisition of a building site through a $300 000 long-term promissory note due in 15 years. Interest on the promissory note is 9.25% compounded semi-annually and is payable at the end of every 6 months. To provide for the redemption of the note, the board agreed to make equal payments at the end of every 6 months into a sinking fund paying 8% compounded semi-annually. (Round all answers to the nearest dollar.)
a. What is the semi-annual interest payment?
b. What is the size of the semi-annual payment into the sinking fund?
c. What is the annual cost of the debt?
d. Compute the book value of the debt after 5 years.
e. Compute the increase in the sinking fund in the 20th payment interval.
f. Construct a partial sinking fund schedule showing details, including the book value of the debt, for the first 3 years, the last 3 years, and totals.