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QUESTION

A company borrows $130000, which will be paid back to the lender in one payment at the end of 8 years.

A company borrows $130000, which will be paid back to the lender in one payment at the end of 8 years. The company agrees to pay semi-annually interest payments at the nominal annual rate of 13% compounded semi-annually. At the same time the company sets up a sinking fund in order to repay the loan at the end of 8 years. The sinking fund pays interest at an annual nominal interest rate of 8% compounded semi-annually. Find the total amount of the semi-annually payments, that is, the sum of the interest payment and the sinking fund payment.

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