What Is the Annualized Cost of the Debt for a Sinking

question 12

Multiple Choice

What is the annualized cost of the debt for a sinking fund that has semi-annual deposits and it is set up to pay off a debt of $20 000 over a period of 5 years? The sinking fund earns 4.6% compounded annually and the loan rate on the debt is 9.2% compounded quarterly.

• A)$5777.52
• B)$5447.52
• C)$5477.52
• D)$5424.52
• E)$5577.52

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