E6-16B (Retirement of Debt) Mejia borrowed $200,000 on March 1, 2013.

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E6-16B (Retirement of Debt) Mejia borrowed $200,000 on March 1, 2013. This amount plus accrued interest

at 10% compounded semiannually is to be repaid March 1, 2023. To retire this debt, Mejia plans to contribute to a debt retirement fund five equal amounts starting on March 1, 2018, and for the next four years. The fund is expected to earn 8% per annum.

Instructions

How much must Mejia contribute each year to provide a fund sufficient to retire the debt on March 1, 2023?

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