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MA170wk11solns

# MA170wk11solns - MA170 Week 11 Report Sinking Funds Bonds...

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Unformatted text preview: MA170 Week 11 Report: Sinking Funds; Bonds Name: Lab: Fall 2010 1. [5 marks ] A sinking fund is created to repay a debt of \$500 000 at the end of 20 years. The interest rate on the principal is 6% compounded annually. Sinking fund payments of \$10 926.10 are made annually and the sinking fund earns interest at a rate of 8% compounded annually. Complete the &rst three lines of the sinking fund schedule below . Make sure to show all your calculations. Pmt Interest Payment Interest Increase Balance # Pmt to Fund Earned in Fund in Fund ¡¢ ¡¢ ¡¢ 1 30 000 10 926 : 10 10 926 : 10 10 926 : 10 2 30 000 10 926 : 10 (10926.10)(0.08) = 874 : 09 10926.10 + 874.09 = 11 800 : 19 10926.10 + 11800.19 = 22 726 : 29 3 30 000 10 926 : 10 (22726.29)(0.08) = 1818 : 10 12 744 : 20 35 470 : 49 . . . 2. [4 marks ] A sinking fund earning a semi-annual interest rate of 6% is set up to accumulate \$30 000 over a period of 15 years. Use the excel template MA170wk11sinkingfund.xls found on the lab web page and the following instructions to construct a complete sinking fund schedule. (a) Enter the periodic interest rate i in H2. To determine the size of the semi-annual payments, rounded to two decimal places, in H4: =ROUNDUP(H3/(((1+H2)^30-1)/H2),2) Deposit amount: \$379.47 (b) Number the payments in column A: Enter 0 in A2. In A3, enter =A2+1. Copy A3 to A4 through A32....
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MA170wk11solns - MA170 Week 11 Report Sinking Funds Bonds...

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