The answer sheet says that the info in the question that is given in bold below is irrelevant to finding the answer. Why? I thought the loan=accumulated value of interest payments plus accumulated value of the sinking fund payments.
Thank you all!
Quote:
Smith borrows $3000 and agrees to establish a sinking fund to repay the loan at the end of 10 years. Interest at 8% on the debt is paid annually as it falls due. Level annual deposits to the sinking fund are made at the end of the each year, with interest accumulating at an effective annual rate of 5% for the first four years and 3%, thereafter. What is the size of the sinking fund payment? |
Thank you all!
Sinking Fund Question
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