A company borrows $200000, which will be paid back to the lender in one payment

Question

A company borrows $200000, which will be paid back to the lender in one payment at the end of 8 years. The company agrees to pay monthly interest payments at the nominal annual rate of 4% compounded monthly. At the same time the company sets up a sinking fund in order to repay the loan at the end of 8 years. The sinking fund pays interest at an annual nominal interest rate of 13% compounded monthly. Find the total amount of the monthly payments, that is, the sum of the interest payment and the sinking fund payment.
Total monthly payment = $

Explanation / Answer

Interest payment use excel function

PMT(0.04/12,12*8,-200000,0,0)

= $2437.86

Sinking fund monthly payment

PMT(0.13/12,12*8,-200000,0,0)

= $3361.45

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