User Account

All Pages

What is the amount of each sinking-fund payment

Assignment Help Accounting Basics
Reference no: EM132782677

A company decides to borrow $100 000 at j1 = 12% in order to finance a new equipment purchase. One of the conditions of the loan is that the company must make annual payments into a sinking fund (the sinking fund will be used to pay off the loan at the end of 20 years). The sinking-fund investment will earn j1 = 6%.

Problem a) What is the amount of each sinking-fund payment if they are all to be equal?

Problem b) What is the total annual cost of the loan?

Problem c) What overall annual effective compound interest rate is the company paying to borrow the $100 000 when account is taken of the sinking-fund requirement?

Reference no: EM132782677

Questions Cloud

How does current value effect the needle : How does current value effect the needle on a compass around a magnet.
Prepare the journal entries to record disposal of warehouse : On 1 January 2019, The warehouse was sold on 30 June 2020 for $180,000. Prepare the journal entries to record the disposal of the warehouse.
PSY 101 Smarter Decisions through Psychology Assignment : PSY 101 Smarter Decisions through Psychology Assignment Help and Solution - Strayer University, USA - Homework Help - Why may Gary value his peers more
Find the wavelength of the waves : A student performs Young's double-slit experiment using a slit separation of 21.6 µm. A screen is placed 2.50 m from the centre of the sources such
What is the amount of each sinking-fund payment : What overall annual effective compound interest rate is the company paying to borrow the $100 000 when account is taken of the sinking-fund requirement?
What is a possible disadvantage of designing a car : What is a possible disadvantage of designing a car for only one crash speed?
What is the force of friction : The coefficient of static friction between the surfaces is 0.50 and of kinetic friction is 0.30. A horizontal force of 300 N is applied to the object.
What stock a beta is : Expected market return is 15%. Stock A's current price is $25 and will pay a $1 dividend at the end of the year. if the stock is priced at $30 at year-end, is
What is the magnitude of displacement the man made : A man is traveling along the equator from one side of earth to another side, what is the magnitude of displacement the man made

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd