1. A company establishes a sinking fund to discharge a debt of $750,000 due in 8 years by making equal semiannual deposits, the first due in 6 months. If the investment pays 12%, compounded semiannually what is the size of the deposits?
2. Calculate the discount factor for each spot interest rate in the table below.
Maturity Spot Interest Rate
1 year 6.0%
2 years 6.25%
3 years 6.5%
4 years 7.0%
5 years 7.5%
6 years 7.5%