The town of Kildare bought firefighting equipment for $96 000. The financing agreement provides for annual interest payments and equal payments into a sinking fund for 10 years. After 10 years the proceeds of the sinking fund will be used to retire the principal. Interest on the debt is 14.5% compounded annually, and interest earned by the sinking fund is 13% compounded annually.
(a) What is the annual interest payment?
(b) What is the size of the annual payment into the sinking fund?
(c) What is the total annual cost of the debt?
(d) What is the book value of the debt after 4 years?
(e) Construct a partial sinking fund schedule showing details, including the book value of the debt, for the last 3 years and totals.