5. A debt of $250,000 is to be repaid after 5 years. If the interest is charged at 5% compounded semi-annually, a sinking fund is created at a rate of 6% compounded semi-annually. Find: a) the semi-annual cost by the sinking fund method; b) the semi-annual cost by amortization; c) Did the borrower made the right decision in setting up a sinking fund? Justify your answer.

5. A debt of $250,000 is to be repaid after 5 years. If the interest is charged at 5% compounded semi-annually, a sinking fund is created at a rate of 6% compounded semi-annually. Find: a) the semi-annual cost by the sinking fund method; b) the semi-annual cost by amortization; c) Did the borrower made the right decision in setting up a sinking fund? Justify your answer.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

4. ( Fund A earns interest at a simple rate of i% a year. $P is invested in fund A. (a) What is the accumulated value in fund A at time t years. (b) Calculate the effective rate of interest in year 1, year 2 and year 3. Solution:
Solve by using the sinking fund or amortization formula. (Round your answer to the nearest cent.) Sinking fund payment (in $) Sinking FundPayment PaymentFrequency TimePeriod (years) NominalRate (%) InterestCompounded Future Value(Objective) $ every 3 months 4 6.0 quarterly $7,000
How to estimate an appropriate loan tenor of a PE fund? If the fund is maturing in 2 years, and looking to refinance its debt, would a 2 year loan facility be appropriate?
Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $26746 to be accumulated in 6 years; quarterly payments of $925 The interest rate needed is approximately __ % (Type an integer or decimal rounded to two decimal places as needed) Thank you so much
3. Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. FU $13,690 to be accumulated in 3 years; quarterly payments of $1025 The interest rate needed is approximately %. (Type an integer or decimal rounded to two decimal places as needed.)
Find the interest rate needed for the sinking fund to reach the required amount. Assume that the compounding period is the same as the payment period. $35,245 to be accumulated in 6 years; quarterly payments of $1300 The interest rate needed is approximately %. (Type an integer or decimal rounded to two decimal places as needed.)
* Erika Lagliva borrows 35,000 to be repaid for 9 years. (1) Find the total annual cost under the following conditions: a) the debt is to be amortized annually at 5%; b) Interest at 7% is paid on the debt and a sinking fund is set up at 6%; (2) construct an amortization table for (1a); (3) make a sinking fund table for (1b), include column for net amount of loan.
Using the sinking fund formula or a financial calculator, complete the following: (Do m answer to the nearest cent.) $ Required amount 24,900 Frequency of payment Quarterly Length of time 7 years Interest rate 8 % Payment amount end of each period
Find the amount of a perodic payment necessary fur the deposit of a sinking fund. Amount needed a = 60000 Frequency n = semi-annual Rate r = 2% Time t = 10 years
determine the size of the payments that must be made to a sinking fund in order to accumulate $233,188 if the interest rate is 5.25% compounded quarterly and payments are made for 7 1/4 years. Use TVM solver
The following is a sinking fund schedule (depicted below) for a loan of $3000 repaid over four years with an annual effective interest rate of 4%. Please find the value of A, B, C, and D
A company would like to have $400,000 in 6 years. How much should be invested semiannually into an account paying 3.6% compounded semiannually? 7. Identify the type of problem. a. Present Value with compound interest b. Future Value of an Annuity c. Present Value of an Annuity d. Amortization e. Sinking Fund 8. Answer the question in the problem. a. $30,681.38 b. $29,754.02. c. $34,245.54 d. $30,160.79 c. $28,541.46