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Kyle takes out a loan of 1000 at an annual effective interest rate of 6%. He makes level annual interest-only payments at the end of each year for 10 years. In addition, he makes level annual payments to a sinking fund that earns interest at an annual rate of 5%. At the end of 10 years, the sinking fund accumulates to the loan principal and Kyle repays the loan by a lumpsum payment.

a. What is the annual interest payment to the lender?

b. What is the level annual payment amount to the sinking fund?

c. What is Kyle's total payment at the end of each year?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92745998

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