Problem:
Ron borrows $20,000 for 20 years at an annual rate of interest of 10% convertible semiannually. He repays $500 in interest at the end of each six months. The principal and the remaining accrued interest are to be paid at the end of 20 years by equal deposits at the end of six months to a sinking fund that accumulates interest at 8% per annum convertible semiannually.
Required:
Question: How much must Ron deposit in the sinking fund each six months? Explain in detail and provide step by step solution.