A bank in Toronto issued bonds for $750,000 that were redeemable in eight years. It established a sinking fund that was earning 4.50% compounded semi-annually to retire this debt on maturity and made equal deposits at the beginning of every six months into the fund.

a. Calculate the size of the periodic deposits.

b. Calculate the fund balance at the end of the 8^th payment period.

c. Calculate the interest earned in the 9^th payment period.

d. Calculate the amount by which the sinking fund increased in the 9^th payment period.

Round to the nearest cent.

e. Construct a partial sinking fund schedule to illustrate details of the first two payments.

Payment Period	Payment	Interest Earned	Increase in the Fund	Fund Balance	Book Value
0				$0.00	$750,000.00
1
2

Answer rating: 100% (QA)

start principal start balance interest225 on start balance end balance end princi... View the full answer