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Retirement of debt. (Tables needed.) Steve Milner borrowed $120,000 on July 1, 2017. This amount plus...

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Accounting

Retirement of debt. (Tables needed.) SteveMilner borrowed $120,000 on July 1, 2017. This amount plus accruedinterest at 8% compounded semiannually is to be repaid in total onJuly 1, 2027. To retire this debt, Milner plans to contribute to adebt retirement fund five equal amounts starting on July 1, 2022and continuing for the next four years. The fund is expected toearn 6% per annum.

Instructions Compute how much must be contributed each year bySteve Milner to provide a fund sufficient to retire the debt onJuly 1, 2027?

Answer & Explanation Solved by verified expert
4.0 Ratings (702 Votes)
Date Opening Amount Interest4 for 6 months Closing Amount OpeningInterest July12017 120000 1200004 4800 124800 January12018 124800 1248004 4992 129792 July12018 129792 1297924 5192 134984 January12019 134984 1349844 5400 140384 July12019 140384 1403844 5615 146000 January12020 146000 5840 151840 July12020 151840 6074    See Answer
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