Question

Can u solve this pls. if possible using the BA II plus thank u

8) On a loan of $10,000 interest at 9% effective must be paid at the end of each year. The borrower also deposits $X at the beginning of each year into a sinking fund earning 7% effective. At the end of 10 years, the sinking fund is exactly sufficient to pay off the loan. Calculate X

Answer 1

Solution: Givere dala: el Amount deposited in Sinking frend every yecer at the beginning = $x Loan amount $10000 onterest pæirl every year the loan amount after 10 years = $ 10000 Feeture value (FV) OF amocent deposited at the end of ye aos - A CI+ i srl 11-r) i = interest rate = 7% = 0.07 N = year of deposit Cal the beginning or- the year) Suppose one deposids $1 Every year for 10 years, the freture value of each deposit and total fiteere value at the end of 10 years given below :

11-N N A B = A (1.07) Year KO 3 4 Deposit FV of deposit $1 1.967151357 $1 1.838459212 $1 1.71818618 1.605781476 1:500730 352 1.402551731 1. 31079601 1.225043 5 6 $10 it is is in a ū 7 8 9 si 1.1449 10 ST 1.07 Total 14.783559932 Required amount of the future value $10000 Required amount of deposit x; x = 10000 14.78359932 x = $676.43 hot bon

3 using excel FV Function (For confirmalion) Rate = 7yo, N per = 10 pot 676.43 Type = 1 ( Begiraing of year deposit) FV = $10000.01 M