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Determine the size of the periodic interest expense

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Question - The City of Chatham borrowed $98,000 to expand a community centre. The city must pay the interest on the loan at the end of every month and make equal payments at the time of the interest payments into a sinking fund until the loan is retired in 14 years. Interest on the loan is 5.56% compounded monthly and the interest on the sinking fund is 3.01% compounded monthly.

Determine the size of the periodic interest expense of the debt.

Determine the size of the periodic payments into the sinking fund.

What is the periodic cost of the debt?

What is the book value of the debt after 10 years?

Reference no: EM133159736

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