Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

John borrows 1000 for 10 years at an annual effective interest rate of 10%. He can repay this loan using the amortization method with equal

John borrows 1000 for 10 years at an annual effective interest rate of 10%. He can repay this loan using the amortization method with equal size payments of P at the end of each year. Instead, John repays the 1000 using a sinking fund that pays an annual effective rate of 14%. The deposits to the sinking fund are equal to P minus the interest on the loan and are made at the end of each year for the next 10 years. Determine the balance in the sinking fund immediately after the repayment of the loan.(a) 213 (b) 218 (c) 223 (d) 230 (e) 237

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

Microeconomics

Authors: Glenn Hubbard, Anthony O'Brien

7th Edition

0134737504, 978-0134737508

More Books

Students also viewed these Finance questions

Question

Technology

Answered: 1 week ago

Question

Population

Answered: 1 week ago