A city borrows $1 million,paying semi-annual interest at j₂ = 9%.The city creates a sinking fund in which semi-annual deposits of $35,360.93 are made in order to accumulate the $1 million needed to repay the loan upon maturity.The sinking fund earns j₂ = 7%.What is the book value of the debt at the end of the 6 years? (Answer to the nearest dollar)

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Quizplus · Accepted Answer

The book value of the debt at the end of 6 years is the original amount borrowed minus the accumulated value of the sinking fund deposits. The sinking fund accumulates to $1 million, which is the amount needed to repay the loan. Therefore, the book value of the debt is $0 because the sinking fund's purpose is to accumulate enough money to repay the entire loan amount. However, the question seems to be asking for the calculation of the value of the sinking fund or some other calculation related to the debt's interest and repayments, which might not directly lead to a book value of $0. Given the options provided and the typical approach to such problems, it seems there might be a misunderstanding in the interpretation. The correct approach involves calculating the present value of the sinking fund deposits or the outstanding loan balance, but without the specific formula or calculation steps provided in the options, it's challenging to directly correlate to the given choices. The provided answer choice B might be based on a specific calculation error or misunderstanding of the question's requirements.

A City Borrows $1 Million,paying Semi-Annual Interest at J2 =

A City Borrows $1 Million,paying Semi-Annual Interest at J₂ =