A corporation takes out a loan of $A,to be paid back over 12 years using the sinking fund method.The interest rate on the loan is j₄ = 8%,while the sinking fund earns j₄ = 7%.The quarterly expense of debt is $6,509.08.What is the value of A? (Answer to the nearest dollar)

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The correct answer is A because the quarterly expense of debt is $6,509.08, which is the sum of the interest payment and the sinking fund payment. The interest payment is $A * 0.08 / 4 = $2,000, and the sinking fund payment is $A * 0.07 / 4 = $1,750. Therefore, the value of A is $6,509.08 / ($2,000 + $1,750) = $194,500.

A Corporation Takes Out a Loan of $A,to Be Paid