Question
A $10,000 loan can be repaid quarterly for 5 years using amortization and an interest rate ofj12= 10% or by a sinking fund to repay
A $10,000 loan can be repaid quarterly for 5 years using amortization and an interest rate ofj12= 10% or by a sinking fund to repay both principal and accumulated interest. If paid by a sinking fund, the interest on the loan will bej12= 9%.
What annual effective rate must the sinking fund earn to make the quarterly cost the same for both methods?
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Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
9th Edition
1337614689, 1337614688, 9781337668262, 978-1337614689
