A 20-year loan of 50,000$ is repaid as follows. The borrower pays only interest on the loan, annually, at a rate that is equivalent to a discount rate of 5.5% per annum. The borrower will build up a sinking fund which involves making monthly payments such that the proceeds will be sufficient to repay the loan at the end of its term. The payments into the fund accumulate at a rate of interest of j12 = 4%.

a) Compute the monthly payments into the sinking fund which ensures that it contains 50,000$ after 20 years.

b) Compute the annual interest payments made on the loan.

c) Compute the outstanding balance at the end of 10 years if at that moment the loan is partially repaid by using the accumulated amount in the sinking fund.