A borrows $2100 for 15 years at an annual effective interest rate of 11%. A can repay this loan using the amortization method with payments of P at the end of each year. Instead. A repays the loan using a sinking fund that pays an annual effective rate of 14%. The deposits to the sinking fund are equal to P minus the interest on the loan and are made at the end of each year for 15 years. Determine the balance in the sinking fund immediately after repayment of the loan. ANSWER =$

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.