CLR Enterprises borrows $5,000,000 at 7.5% c.a. interest payable yearly, the full principal due and payable in 20 years. To discharge the debt on its due date a sinking fund is established with annual deposits made estimated to earn 4.5% c.a.

Question

1. After 14 years have passed, its found that the sinking fund contains $3,349,396.37. Find the annual deposits necessary for the remaining 6 years if the estimated rate of interest is 5% c.a. Al work must be shown to earn full marks.

2. Determine the effective rate of interest being paid.

3. Find the excess in the S.F. if the interest rates exceeded the estimated 4.5% c.a and it was actually 6% for the first 12 years, and 5.5% for the remaining 8 years. All work must be shown to earn full marks.