1. A firm needs to establish a sinking fund that in 20 years will pay off an outstanding bond issue of $8,500,000. The firm plans to make deposits, which will earn 2.65 percent per year, to this fund at the end of each of the 20 years prior to maturity of the bond.

1. What would be the amount of the annual payments to be paid into the sinking fund?

2. What would be the amount of the annual payments if they were instead made at the beginning of each year?

c. What would be the amount of the annual payments if the payments were instead spread out evenly throughout the year (i.e., daily)? Use the mid-year approximation formula.