Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A loan is issued to be repaid with interest only payments on the loan at 10%. The borrower will also use a sinking fund with

image text in transcribed
A loan is issued to be repaid with interest only payments on the loan at 10%. The borrower will also use a sinking fund with an interest rate of 8% to accumulate the amount of the loan at the end of the term. Assuming year-end payments to the loan and the sinking fund and a term of 3 years. Which interest rate is closest to an equivalent interest rate for an amortization loan with the same total annual payment? That is what interest rate would for a loan would have the same total payment as the sinking fund loan? 9% 12% 11% 10%

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

Managing Finance A Socially Responsible Approach

Authors: D. Crowther

1st Edition

0750661011, 978-0750661010

More Books

Students also viewed these Finance questions

Question

What is your greatest strength?

Answered: 1 week ago