A company borrowed $4,250,000 at an effective rate of 4.25% for 5 years. To make sure it has the money needed to repay the loan when it comes due, the company is making deposits into a sinking fund at the beginning of each quarter. The sinking fund pays the company 3.21%. (a) How much will the company need to have at maturity to pay off this loan? (b) How much should each sinking fund payment be?

A company borrowed $4,250,000 at an effective rate of 4.25% for 5 years. To make sure it has the money needed to repay the loan when it comes due, the company is making deposits into a sinking fund at the beginning of each quarter. The sinking fund pays the company 3.21%. (a) How much will the company need to have at maturity to pay off this loan? (b) How much should each sinking fund payment be?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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