You can pay off a 20 year, $20,000 loan at an effective annual interest rate of i = 8% in one of two ways: using the amortization method with payments P at the end of each year, or using a sinking fund that earns an effective annual interest rate of i = 7.5%. For the second option, you make interest payments at the end of each year and pay off the principle in one lump sum at the end of 20 years. Payments into the sinking fund are P minus the interest on the loan. How much extra do you need at the end of the 20 years to pay off the loan using the second option?