The Town of Snow Lake issued debentures worth $420 000.00 maturing in 15 years to finance construction of recreational facilities. To redeem the debentures, the town council decided to make equal deposits into a sinking fund at the beginning of every three months. Interest earned by the sinking fund is 6.66% compounded quarterly.
a) What is the size of the quarterly payment into the sinking fund?
b) What is the balance in the fund after six years?
c) How much interest is earned by the fund in the 25th payment interval?
d) By how much will the fund increase in the 43rd payment interval?
e) Prepare a partial sinking fund schedule showing details of the first three payments, the last three payments, and totals.

Question

Quizplus · Accepted Answer

The Answer of The Town of Snow Lake issued debentures worth $420 000.00 maturing in 15 years to finance construction of recreational facilities. To redeem the debentures, the town council decided to make equal deposits into a sinking fund at the beginning of every three months. Interest earned by the sinking fund is 6.66% compounded quarterly.
a) What is the size of the quarterly payment into the sinking fund?
b) What is the balance in the fund after six years?
c) How much interest is earned by the fund in the 25th payment interval?
d) By how much will the fund increase in the 43rd payment interval?
e) Prepare a partial sinking fund schedule showing details of the first three payments, the last three payments, and totals.

The Town of Snow Lake Issued Debentures Worth $420 000