1. The Federal National Mortgage Association (Fannie Mae) puts $30 million at the end of each month...

Question:

1. The Federal National Mortgage Association (Fannie Mae) puts $30 million at the end of each month into a sinking fund paying 4.8% interest compounded monthly. The sinking fund is to be used to repay bonds that mature 15 years from the creation of the fund. How large is the face amount of the bonds, assuming that the sinking fund will exactly pay it off?
2. A sets up a sinking fund to replace some aging machinery. It deposits $100,000 into the fund at the end of each month for 10 years. The earns 12% interest compounded monthly. The equipment originally cost $13 million. However, the cost of the equipment is rising 6% each year. Will the be adequate to replace the equipment? If not, how much additional money is needed?
Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...