1. To raise $6,000,000 to expand into new markets, a very successful laptop manufacturing company issued bonds in the market with a coupon rate of 7.50%, paying interest every 6 months, and redeemable in 16 years. They established a sinking fund to retire this debt on maturity and made equal deposits into the fund at the end of every half-year. If the fund was earning 4.80% compounded semi-annually, calculate the periodic cost of the debt.

$126,762.01

$351,762.01

$225,000.00

$357,605.86

Round the sinking fund payment up to the next cent

2. Johnston Industries Ltd. plans to replace a warehouse in 9 years at an estimated cost of $450,000. To pay for the replacement, a sinking fund has been established into which equal payments are made at the end of every quarter. The fund is growing at 9.00% compounded quarterly.

a. What is the size of the quarterly payments?

Round up to the next cent

b. What is the sinking fund balance at the end of 6 years?

Round to the nearest cent