The town of Mount Hope is financing a $4.5 million upgrade to its water system though the provinces Municipal Finance Authority (MFA). The MFA obtained financing via a bond issue with interest at 7.6% compounded semi-annually. At the end of every 6 months, the town is to make equal payments into a sinking fund administered by the MFA so that the necessary funds will be available to repay the $4.5 million bond when it matures in 20 years. The sinking fund earns 4.1% compounded semi-annually.

a. Determine the semi-annual interest payments made to the bond holders.

b. Determine the amount of the sinking fund payments.

c. Determine the semi-annual expense of the debt to the town of Mount Hope.