A company borrows $130000, which will be paid back to the lender in one payment at the end of 8 years. The company agrees to pay semi-annually interest payments at the nominal annual rate of 13% compounded semi-annually. At the same time the company sets up a sinking fund in order to repay the loan at the end of 8 years. The sinking fund pays interest at an annual nominal interest rate of 8% 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 = $________________?

---Can someone explain this to me I've tried to follow what my teacher asks me to do but my calculations are still coming up wrong?

You need to find the payment they are making to the sinking fund. Using the loan formula you would have:

Sinking fund payment:

Loan Formula:

P=PMT { 1- ( 1+ APR/ n) ^ -nY / (APR/n) }

130000 = pmt [ (1+.08/2)^(8*2) -1 / (.08/2]