"AMORTIZATION, INTEREST-BEARING SINKING FUND METHOD, DISCHARGE DEBT. In the interest-bearing SINKING FUND method of discharging a debt, the creditor receives periodic interest, if any, and the face value of the debt, which is the final value of the sinking fund, at the end of the term. Nominal annual interest rate for fund amortization is ANNRATE% and for fund interest is FNDRATE%. NUMYEARS is the term in years. PAYMNINT is the payment interval in months.TOTPAYMN is the total periodic payment including fund interest. VALUSINK is the sinking fund's value at term. EFFRATE% is the yearly effective rate for fund amortization. PRESVALU is the value of debt just after payment for PERIOD#.FUNDINCR and INTADDED are fund's increase and added interest, respectively, forcurrent payment period. *** Answers to problems *** (a) Set ANNRATE%=3, FNDRATE%=5, NUMYEAR=4 (8 semiann.=4yrs), PAYMNINT=6 (semiann= 6 months), PERIOD#=1, VALUSINK=10,000. (a) The periodic payment is PERPAYMN =1185.84 and (b) the total semiannual cost is TOTPAYMN=1435.84. Type any key to exit. ||(a) A debt of $10000 with interest at 5% compounded semiann. isto be discharged by the sinking fund method. If 8 equal semiann. deposits are made into the sinking fund which pays 3% comp. semiann. (a) Find the size of thedeposit and (b) the semiannual cost of the debt. Type , to see answers. Type (F2) to return to helpfile. '' (c) PCSCC Inc., 1993"
