Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company borrows $120000, which will be paid back to the lender in one payment at the end of 9 years. The company agrees to

A company borrows $120000, which will be paid back to the lender in one payment at the end of 9 years. The company agrees to pay semi-annually interest payments at the nominal annual rate of 10% compounded semi-annually. At the same time the company sets up a sinking fund in order to repay the loan at the end of 9 years. The sinking fund pays interest at an annual nominal interest rate of 6% compounded semi-annually. Find the total amount of the semi-annually payments, that is, the sum of the interest payment and the sinking fund payment.

Total semi-annually payment = $___________

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory And Practice

Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason

3rd Canadian Edition

017658305X, 978-0176583057

More Books

Students also viewed these Finance questions

Question

What was the positive value of Max Weber's model of "bureaucracy?"

Answered: 1 week ago

Question

explain the criticisms of sales margin variances; L01

Answered: 1 week ago

Question

prepare a set of accounts for a standard costing system; L01

Answered: 1 week ago