A sinking fund is to be set up to provide for the repayment of 80% of the principal amount of a $1 million debt in 10 years. Equal payments are to be made at the end of every quarter. The sinking fund will earn 7% compounded quarterly. Round the sinking fund payments and periodic interest earnings to the nearest dollar.
a) Calculate the size of the sinking fund payments.
b) Construct a partial sinking fund schedule showing details of the first two and the last two payments, and the total of the interest earned.

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The Answer of A sinking fund is to be set up to provide for the repayment of 80% of the principal amount of a $1 million debt in 10 years. Equal payments are to be made at the end of every quarter. The sinking fund will earn 7% compounded quarterly. Round the sinking fund payments and periodic interest earnings to the nearest dollar.
a) Calculate the size of the sinking fund payments.
b) Construct a partial sinking fund schedule showing details of the first two and the last two payments, and the total of the interest earned.

A Sinking Fund Is to Be Set Up to Provide