To provide for the purchase of heavy construction equipment estimated to cost $110 000, Valmar Construction is paying equal sums of money at the end of every six months for five years into a sinking fund earning 7.5% com- pounded semi-annually.
(a) What is the size of the semi-annual payment into the sinking fund?
(b) Compute the balance in the fund after the third payment.
(c) Compute the amount of interest earned during the sixth payment interval.
(d) Construct a sinking fund schedule showing totals. Check your answers to parts (b) and (c) with the values in the schedule.