Rebecca borrows $30,000 at 5.5% interest.

a) Find her annual payment if she uses amortization over 8 years and makes

level payments at the end of each year.

b) How much interest would Rebecca pay using this method?

c) Find her annual cost if she pays the bank the interest due on the outstanding

balance at the end of every year and makes annual contributions to a sinking

fund earning 6.5% interest with the intention of paying off the loan at the end

of 10 years.

d) Rebecca decides to set her total annual cost to the loan payment amount

calculated in part a) . She pays the interest each year and invests the balance

in her sinking fund. How much does she have left in the sinking fund once

she pays off the loan?