A borrower is repaying a loan with 10 annual payments of $1000. Half of the loan is repaid
by the amortization method at 5% effective. The other half of the loan is repaid by the
sinking fund method in which the tender receives 5% effective on the investment and the
sinking fund accumulates at 4% effective. Find the amount of the loan.
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Amortization payment is0.5La10|0.05Sinking fund payment is0.05(0.5L) +0.5Ls10|0.04The sum of these two is equal to 1000. Solving for L givesL=10000.5a10|0.05+ 0.025 +s0.510|0.04= 7610
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