Question: Ashley borrows 1 0 0 , 0 0 0 for 1 0 years at an annual effective interest rate of 1 1 % . At

Ashley borrows

100, 000

for

10

years at an annual effective interest rate of

11 % .

At the end of each year, she pays the interest on the loan and also deposits a level payment into a sinking fund. The sinking fund earns an annual effective interest rate of

7 % .

At the end of

10

years, the amount in the sinking fund is used to repay the loan. Calculate the total amount of the payments made by Ashley over the

10

year period.

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