Question
Dominic borrows 8900 dollars today, and agrees to repay the loan by making annual interest payments to the lender, and by also accumulating a sinking
Dominic borrows 8900 dollars today, and agrees to repay the loan by making annual interest payments to the lender, and by also accumulating a sinking fund with increasing annual deposits to repay the principal. The interest rate on the loan is 8.7 percent, and the interest paid on the sinking fund is 6 percent, both effective. If the loan is to be settled 19 years from now, and the sinking fund deposits increase by 6 dollars per year, what is Dominic's total outlay at the end of the 6th year? (Assume the first interest payment and sinking fund deposits are both due in one year.)
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