Question: Do not use Excel. Use Sinking Fund methord. Rachel borrows 100,000 for 20 years at an annual effective interest rate of 8%. At the end

Do not use Excel. Use Sinking Fund methord.

Rachel borrows 100,000 for 20 years at an annual effective interest rate of 8%. At the end of each year she pays the interest on the loan and deposits a level payment into a sinking fund. The sinking fund earns an annual effective interest rate of 5%. At the end of 20 years, the amount in the sinking fund is used to repay the loan. Calculate the total amount of the payments by Rachel over the 20-year period.

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