Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mary borrows 5000 for 10 wars at an annual effective interest rate of 10%. She can repay this loan using the amortization method with repayments

image text in transcribed

Mary borrows 5000 for 10 wars at an annual effective interest rate of 10%. She can repay this loan using the amortization method with repayments of 813.73 at the end of each year. Instead, she repays the 5000 using a sinking fund that pays an annual effective interest rate of 15%. The deposits to the sinking fund are equal to 813.73 minus the interest on the loan and are made at the end of each year for 10 years Determine the balance in the sinking fund immediately after repayment of the loan

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Finance questions