SINKING FUND:

Consider a loan of amount $1000 for

four years on which an annual
effectie rate of interest of 10! is
char"ed if the #orrower accumulates
the amount necessary to re$ay the
loan #y means of four annual sin%in"
fund de$osits in a fund earnin" at an
annual effectie rate of &!'
Construct the re$ayment ta#le'
Example 43 (SOA):
Susan #orrows 100(000' She has two
re$ayment o$tions:
I' )eel monthly $ayments at the end of
each month for *0 years at a nominal
interest rate of 1+! conerti#le monthly'
II' ,onthly interest $ayments to a lender
at the end of each month for 1- years at a
nominal annual interest rate of 1+!
conerti#le monthly' .rinci$al is to #e
accumulated #y ma%in" leel annual
$ayments at the end of each year for 1-
years into a sin%in" fund earnin" interest
at an annual effectie rate i' /he total
$ayments under o$tion II are 1+-(000
less than the total $ayments under o$tion
I' Calculate i'