Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

A company borrows $81000 at 12% simple interest from State Bank to purchase equipment. State Bank requires the company to make monthly interest-only payments and

A company borrows $81000 at 12% simple interest from State Bank to purchase equipment. State Bank requires the company to make monthly interest-only payments and pay the full $81000 at the end of 5 years. In order to meet the 5 year obligation of $81000,the company makes equal deposits at the end of each month into a sinking fund with Wolf Savings. The sinking fund earns 6% compounded monthly. Note: This problem is set to allow for an answer of a specific tolerance. Be careful in your rounding. You may get some answers correct but not be in the range of answers for the others. a. State the monthly interest payment to State Bank (rounded normally to the next cent). b. State the amount of the equal monthly deposits to Wolf Savings, rounded normally to the next cent. c. State the sinking fund balance at the end of 3 years. $ d. State the total amount of interest earned on the sinking fund at the end of 3 years. $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

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

Step: 2

blur-text-image

Step: 3

blur-text-image

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

Advanced Accounting

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

10th edition

0-07-794127-6, 978-0-07-79412, 978-0077431808

Students also viewed these Finance questions