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Langford Insurance Agency borrowed $50000 at 13% simple interest from First Bank to purchase some office...

Langford Insurance Agency borrowed $50000 at 13% simple interest from First Bank to purchase some office furniture. First Bank requires monthly interest payments and the full $50000 at the end of 5 years. In order to meet this obligation, Langford Insurance Agency plans to make monthly deposits to a sinking fund earning 8.5% compounded monthly. Round up any part of a cent.

  • a. State Langford Insurance Agency's total monthly obligation.

    b. State the balance in the sinking fund just after 31 deposits.

    c. Set up a sinking fund schedule on your own paper. Then, state the following:
    • The amount of interest earned the second month. $  
    • The balance at the beginning of the fourth month. $

Solutions

Expert Solution

c. Sinking Fund Schedule

From the above schedule,

The amount of interest earned the second month = $4.76

The balance at the beginning of the fourth month = $2,029.29

Sinking Fund Schedule Workings:

jeff jeffy answered 2 years ago
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