The Town of Snow Lake issued bonds worth $430,000 maturing in 15
years and a bond rate of 7.3% to finance construction of
recreational facilities. To ensure that they have the funds to
redeem the bonds in 15 years, the town council decided to make
equal deposits into a sinking fund at the end of every six months.
Interest earned by the sinking fund is 6.67% compounded
semiannually.
a. Determine the semi-annual interest payments made to the bond
holders.
b. Determine the amount of the sinking fund payments.
c. Determine the annual expense of the debt to the Town of
Snow Lake.