Question #193961
find the sinking fund payment
6.) cavell manufacturing established a slinking fund to pay off a 100,000,000 bond issue that comes due in 8 years. A) what equal payments must be deposited in the fund every 3 months at 6% interest compounded quarterly in order for cavell to meet this financial obligation ? B) what is the total amount of interest earned in the sinking fund account?
7) the Carmichael hotel has a financial obligation of 10,000,000 due in 5 years. A sinking fund is established to meet this obligation at 12% interest compounded monthly .a) what equal monthly sinking fund payments are required to accumulate the needed amount? B.) what is the total amount of interest earned in the account?
Expert's answer
6a) Equal payment: bond issues ÷ years in month × rate
100000000÷(8×12×3) 6/100
(100000000÷17.28 )= $5787037
6b) Total amount of interest earned in the sinking fund account=
(100000000- 5787037)= $ 94212.963
7a) Equal monthly payment
Bond issues ÷ years in month × rate
10000000÷ (5×12) × 12/100
(10000000÷ 7.2)= $ 1388888
7b) Total amount of interest
(10000000- 1388888)= $ 8611112
