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John can repay a loan of 200,000 in one of two ways: i) 30 annual payments based on amortization at i=0.13 ii) 30 annual interest
John can repay a loan of 200,000 in one of two ways:
i) 30 annual payments based on amortization at i=0.13
ii) 30 annual interest payments to a lender at rate i=0.12, along with 30 annual deposits to a sinking fund earning at rate j.
Find the value of j to make the schemes equivalent.
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