1. John borrows Kshs 3,000,000 from a bank and promises to repay this money over the next 5 years by making level payments at the end of each year. His annual effective rate of interest of between 8% to 10%.

Required;

Using Any rate of interest from the range given;

1. Create Mikes amortization schedule. (4 marks)
2. Using the rate of interest selected in part (i) create Mikes Sinking fund Schedule (4 marks)
3. Show that repayment methods (i) and (ii) above are equivalent. (2 mark)