1. Torbet Fish Packing Company wants to accumulate enough money over the next 10 years to pay for the expected replacement of its digitalized, automated scaling machine. The new machine is expected to cost $200,000 in 10 years. Torbet currently has $10,000 that it plans to invest over the next 10 years to help pay for the new machine.
Torbet wants to put away an equal, end-of-year amount into a sinking fund investment account at the end of each of the next 10 years. Earnings on all of the investments are expected to be 7 percent for the first five years and 9 percent thereafter. What equal, end-of-year amount must Torbet save each year over the next 10 years to meet these needs?
2. Crab State Bank has offered you a $1,000,000 5-year loan at an interest rate of 11.25 percent, requiring equal annual end-of-year payments that include both principal and interest on the unpaid balance. Develop an amortization schedule for this loan.