1  The deposits to the sinking fund are equal to KSh.8,137.25 minus the interest on the loan and are
made at the end of each year for 10 years. Determine the balance in the sinking fund immediately
after repayment of the loan. [5 marks]
2.  1000 is deposited into Fund X, which earns an annual eective rate of 6%. At the end of each year,
the interest earned plus an additional 100 is withdrawn from the fund. At the end of the tenth year,
the fund is depleted. The annual withdrawals of interest and principal are deposited into Fund Y ,
which earns an annual eective rate of 9%. Determine the accumulated value of Fund Y at the end of
year 10. [6 marks]
3 . Olga buys a 5-year increasing annuity for X. Olga will receive 2 at the end of the rst month, 4 at
the end of the second month, and for each month thereafter the payment increases by 2. The nominal
interest rate is 9% convertible quarterly. Calculate X. [6 marks]

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