Find the sinking fund deposit

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Reference no: EM131928226

Interest at 8% on a loan of $2000 is paid annually as it falls due. A sinking fund is established at 5% to enable the borrower to repay the loan at the end of 8 years.

Eight equal annual payments will be made to the sinking fund, one at the end of each of the 8 years.

a) Find the sinking fund deposit;

b) Find the net outstanding balance on the loan at time 5 immediately after the 5^th outlay (including annual sinking deposit and interest due).

Reference no: EM131928226

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