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A corporation takes out a 20 year 100,000 loan. The corporation will make level quarterly interest payments based on a nominal annual interest rate of
A corporation takes out a 20 year 100,000 loan. The corporation will make level quarterly interest payments based on a nominal annual interest rate of 10%, converted quarterly. At the end of 20 years the corporation will repay the loan amount in a lump sum. During the period of the loan the corporation will make quarterly deposits to a sinking fund to accumulate sufficient funds to pay off the principal of the loan at the end of 20 years. The interest rate of the sinking fund is unknown. If the total amount the corporation pays each quarter (loan interest + sinking fund deposit) equals the level payment for a 20 year loan of the same amount at an interest rate of 12% converted quarterly. Find the sinking fund deposit. a. 857.36 b. 752.43 C. 827.79 d. 811.17 e. 945.32
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