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What amount must be deposited annually

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Reference no: EM132171865

General Hospital is evaluating a zero interest capital financing alternative.

General would borrow $100,000,000 and receive $62,100,000 in cash.

The $100,000,000 note would carry no interest payment but would be due at the end of the fifth year.

The lender would require an annual year end sinking fund payment over the next 5 years to meet the maturity value of $100,000,000.

If the fund is scheduled to earn interest at the rate of 6% annually, what amount must be deposited annually?

Reference no: EM132171865

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