Armita borrows $73,000 00 which she will repay by making interest only payments over 10 years She is also required to set up a sinking fund that will be used to pay the principal at maturity The interest rate on the loan is i (365) 7 125 , and the interest rate on the sinking fund is i (52) 3 125 Payments on both the loan and the sinking fund will be made bi weekly Armita defaults on the loan after 209 periods (just after making both her loan payment and sinking fund deposit How much does the lender lose on default

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Question: Armita borrows $73,000.00 which she will repay by making interest only payments over 10 years. She is also required to set up a sinking fund

Armita borrows $73,000.00 which she will repay by making interest only payments over 10 years. She is also required to set up a sinking fund that will be used to pay the principal at maturity. The interest rate on the loan is i⁽³⁶⁵⁾ = 7.125%, and the interest rate on the sinking fund is i⁽⁵²⁾ = 3.125%. Payments on both the loan and the sinking fund will be made bi-weekly. Armita defaults on the loan after 209 periods (just after making both her loan payment and sinking fund deposit. How much does the lender lose on default?

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