ZuoTi.Pro
Question

A city borrows $500,000 and agrees to pay interest semi-annually at i=10%. a). What semi-annual deposits...

A city borrows $500,000 and agrees to pay interest semi-annually at i=10%.

a). What semi-annual deposits must be made into sinking fund earning interest at r=6% in order to repay the debt in 15 years?

b). What is the total semi-annual expense of the debt?

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Request Professional Answer

Request Answer!

We need at least 10 more requests to produce the answer.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)

All students who have requested the answer will be notified once they are available.
Know the answer?
Add Answer to:
A city borrows $500,000 and agrees to pay interest semi-annually at i=10%. a). What semi-annual deposits...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Similar Homework Help Questions

  • Dominic borrows 7200 dollars today, and agrees to repay the loan by making annual interest payments...

    Dominic borrows 7200 dollars today, and agrees to repay the loan by making annual interest payments to the lender, and by also accumulating a sinking fund with increasing annual deposits to repay the principal. The interest rate on the loan is 8.8 percent, and the interest paid on the sinking fund is 6.7 percent, both effective. If the loan is to be settled 15 years from now, and the sinking fund deposits increase by 7 dollars per year, what is...

  • A company borrows $160000, which will be paid back to the lender in one payment at the end of 5 years. The company agree...

    A company borrows $160000, which will be paid back to the lender in one payment at the end of 5 years. The company agrees to pay semi-annually interest payments at the nominal annual rate of 10% compounded semi-annually. At the same time the company sets up a sinking fund in order to repay the loan at the end of 5 years. The sinking fund pays interest at an annual nominal interest rate of 4% compounded semi-annually. Find the total amount...

  • Barbara borrows $3500. She agrees to make monthly interest payments on the loan and will build...

    Barbara borrows $3500. She agrees to make monthly interest payments on the loan and will build up a sinking fund with monthly deposits to repay the principal with a single payment 21 months from now. If the interest being charged on the loan is j12 = 8% and the interest being earned on the sinking fund is j12= 5.2%, what is the monthly cost of the debt for Barbara? I got 182.95 but is wrong. please help

  • Barbara borrows $3000. She agrees to make monthly interest payments on the loan and will build...

    Barbara borrows $3000. She agrees to make monthly interest payments on the loan and will build up a sinking fund with monthly deposits to repay the principal with a single payment 19 months from now. If the interest being charged on the loan is j12 = 8.5% and the interest being earned on the sinking fund is j12 = 5.4%, what is the monthly cost of the debt for Barbara?

  • (1 point) A company borrows $200000, which will be paid back to the lender in one...

    (1 point) A company borrows $200000, which will be paid back to the lender in one payment at the end of 12 years. The company agrees to pay monthly interest payments at the nominal annual rate of 8% compounded monthly. At the same time the company sets up a sinking fund in order to repay the loan at the end of 12 years. The sinking fund pays interest at an annual nominal interest rate of 4% compounded monthly. Find the...

  • Sepia Inc. issued bonds for $500,000 that were redeemable in 8 years. They established a sinking...

    Sepia Inc. issued bonds for $500,000 that were redeemable in 8 years. They established a sinking fund that was earning 5.75% compounded semi-annually to pay back the principal of the bonds on maturity. Deposits were being made to the fund at the end of every 6 months. a. Calculate the size of the periodic sinking fund deposit. b. Calculate the sinking fund balance at the end of the payment period 10. c. Calculate the interest earned in payment period 11....

  • 1) Carlos has borrowed $8,000 for 8 years at 6% compounded semi-annually. He will repay interest...

    1) Carlos has borrowed $8,000 for 8 years at 6% compounded semi-annually. He will repay interest every 6 months plus principal at maturity. He will also deposit X every 6 months into a sinking fund paying 5% compounded semi-annually to pay off the principal at maturity. a) Find X. Carlos goes bankrupt at the end of year 6, just after making his interest payment and sinking fund deposit. The bank confiscates the money in the sinking fund but gets no...

  • (20 points) You borrow $3000 for four years at an annual effective interest rate of i....

    (20 points) You borrow $3000 for four years at an annual effective interest rate of i. The investor pays interest only on the loan at the end of each year and accumulates the amount necessary to repay the principal at the end of four years by making level payments at the end of each year into a sinking fund (an account used to accumulate money needed to pay back a debt). The sinking fund earns an annual effective interest rate...

  • PLEASE NO HANDWRITTEN OR COPIED ANSWERS The city of Metropolis borrows $ 88,000,000 so that it can build a football stad...

    PLEASE NO HANDWRITTEN OR COPIED ANSWERS The city of Metropolis borrows $ 88,000,000 so that it can build a football stadium. It plans to setup a sinking fund that will repay the loan 10 years later. Assume a 6% interest rate per year. What will Metropolis have to place in the fund in the beginning of each year in order to pay back the $ 88,000,000? Select one: a. $ 534,309 b. $ 536,980 c. $ 6,298,472 d. $ 6,676,380

  • When the market rate of interest was at an annual rate of 12%, King company issued...

    When the market rate of interest was at an annual rate of 12%, King company issued $5,000,000, 10-year, 11% bonds payable. The interest on the bonds is to be paid semi-annually. 1. Calculate the selling price of the bonds 2. Calculate the interest expense for the first period using the effective interest method 3. Calculate the interest expense for the first period using the straight line method As additional security for the bondholders, King has agreed to make ten annual...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT