Question
A $12,500 bond loan was cleared in 7 years by setting up a sinking fund that was earning 6.00% compounded semi-annually. The deposits were made
A $12,500 bond loan was cleared in 7 years by setting up a sinking fund that was earning 6.00% compounded semi-annually. The deposits were made to the fund at the end of every 6 months.
a. Calculate the size of the periodic payments deposited.
Round your answer up to the next cent
b. What was the total interest earned by the fund?
Round to the nearest cent
2. Sepia Inc. issued bonds for $425,000 that were redeemable in 6 years. They established a sinking fund that was earning 3.66% compounded semi-annually to pay back the principal of the bonds on maturity. Deposits were being made to the fund at the end of every 6 months.
a. Calculate the size of the periodic sinking fund deposit.
Round your answer up to the next cent
b. Calculate the sinking fund balance at the end of the payment period 8.
Round to the nearest cent
c. Calculate the interest earned in payment period 9.
Round to the nearest cent
d. Calculate the amount by which the sinking fund increased in payment period 9.
Round to the nearest cent
Step by Step Solution
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Answer a Calculate the size of the periodic payments deposited Given Bond loan 12500 Time period 7 years Interest rate 600 compounded semiannually Dep...Get Instant Access to Expert-Tailored Solutions
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