Here's a question for you guys....
A company has borrowed $225,000 at 13% compounded semi-annually to build an office complex. The loan agreement requires the payment of interest end of every year. In addition, the company is to make equal payments into a sinking fund so that the principal can be retired after fifteen (15) years. Interest earned by the fund is 11% compounded semi-annually.
- What is the semi-annual interest payment on the debt?
- What is the size of the semi-annual deposits into the sinking fund?
- What is the total annual cost of the debt to the company?
- What is the interest earned by the sinking fund in the 20th payment interval?
- What is the balance of the fund after the 20th payment is made?
- What is the book value of the debt after twelve (12) years?
This is what I got so far....
11 I/Y, C/Y + P/Y = 2
Sorry guys if I am not showing my work but I have been asked to learn how to use my financial calculator and that's what I did.
thanks in advance.