Answer:
$15,903
Explanation:
Two payments are involved;
the interest payment on the loan and the payment to the sinking fund.
Annual interest payment:
= 10,000 × 9%
= $900
Payment to the sinking fund:
Amount to be accumulated by the end of the 10th year along with interest = $10,000
Amount to be deposited at the end of each year:
[tex]=10,000\times \frac{0.08}{(1.08)^{10}-1}[/tex]
[tex]=10,000\times \frac{0.08}{1.158925}[/tex]
[tex]=10,000\times 0.069029[/tex]
= $690.294
Total payment per annum:
= Annual interest payment + Amount to be deposited at the end of each year
= $900 + $690.294
= $1,590.29
Total payment for the 10 year period:
= 1590.29 × 10
= $15,903
