Devi borrows $$63,000\mathrm{.}00$ which she will repay by making interest only payments over $5$ 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$(26)=4\mathrm{.}000\%,$ and the interest rate on the sinking fund is i$(2)=1\mathrm{.}625\%.$ Payments on both the loan and the sinking fund will be made monthly. Devi defaults on the loan after $54$ periods $($just after making both her loan payment and sinking fund deposit. How much does the lender lose on default?

Question $5$Answer

a$.$

$$7,054\mathrm{.}43.$

b$.$

$$6,531\mathrm{.}88.$

c$.$

$$5,290\mathrm{.}82.$

d$.$

$$5,552\mathrm{.}10.$

e$.$

$$5,813\mathrm{.}37.$