A ten year loan of $10,000 at 8% annual effective can be repaidusing any of the four following methods: (i) Amortization method,with annual payments at the end of each year. (ii) Repay theprincipal at the end of ten years while paying the 8% annualeffective interest on the loan at the end of each year. Inaddition, make level annual deposits at the end of each year into asinking fund earning 6% annual effective so that the sinking fundaccumulates to $10,000 at the end of the 10th year. (iii) Same asii, except that the sinking fund earns 8% annual effective. (iv)Same as ii, except that the sinking fund earns 12% annualeffective. Rank the annual payment amounts of each method.
