Answer:
$1,535.21
Explanation:
Given:
Amount borrowed = $60,000
Time period = 12 years
rate of interest = 8%
Sinking fund is created to pay off the amount borrowed after 12 years. It is required to compute periodic payments:
[tex]P = \frac{\frac{r}{m} }{(1+\frac{r}{m})^{n\times m}-1}\times A[/tex]
where r is 0.08
m = number of payments per year which is 2 (since it's semi annual)
n = number of years
A is amount of sinking fund
Substitute these values in the above formula:
[tex]P = \frac{\frac{0.08}{2} }{(1+\frac{0.08}{2})^{12\times 2}-1}\times60,000[/tex]
= $1,535.21
Therefore, $1,535.21 is paid into the fund each period.
