Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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. 827.79 b. 945.32 C. 811.17 d. 857.36 e. 752.43

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

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

Principles Of Sustainable Finance

Authors: Dirk Schoenmaker, Willem Schramade

1st Edition

0198826605, 978-0198826606

More Books

Students also viewed these Finance questions