Smith borrows $1000 and agrees to establish a sinking fund to repay the loan at the end of 10 years.
Interest at 8% on the debt is paid annually as it falls due. The level annual deposits of $79.50 to the sinking fund are made at the end of each year.
a) Find the rate earned by the sinking fund.
b) Find the net interest paid in the 5th outlay (interest due less interest earned in the sinking fund).
c) Find the net outstanding balance of the loan immediately after the 5th outlay.