An annual payment loan of $100,000 is taken out for a term of 10 years at 8% interest. The agreement stipulates interest payments only during the term of the loan, with repayment of the full $100,000 at maturity (10 years). The borrower will make level annual payments into a sinking fund earning 6.5%.

(A)  Compute the amount of the sinking fund deposit. 

B)  What is the balance in the sinking fund at duration 5?

(C)  How much principal accrues to the sinking fund in year 5?

Answer rating: 100% (QA)

A To compute the amount of the sinking fund deposit for an annual payment loan of 100000 taken ... View the full answer