John borrows 10000 for 10 years at an e ective interest, Financial Management

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John borrows 10000 for 10 years at an e ective interest

John borrows 10,000 for 10 years at an e ective interest rate of 10%. He can repay the loan using the amortization method with payments of 1,627.45 at the end of each year. Instead John repays the loan using a sinking fund that pays an annual e ective rate of 14%. Deposits to the sinking fund are equal to 1,627.45 less interest on the loan, and are made at the end of each year for 10 years. What is the balance in the Sinking Fund immediately after repayment of the loan (after 10 years)?

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Financial Management: John borrows 10000 for 10 years at an e ective interest

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Financial Management: John borrows 10000 for 10 years at an e ective interest

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