Bond Deficiency

[pmcclain]

I thought I would try to find an Accountant Forum for some tutor assistance.

I have looked all over the internet since Wednesday, asked the instructor, on LinkedIn, and now here on how to figure this out.

PROBLEM:

Kate Greenway Corporation, having recently issued a $20,040,000, 15-year bond issue, is committed to make annual sinking fund deposits of $624,600. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds?

Answer is No.


If not, what will the deficiency be?

I cannot figure out the deficiency, any help would be appreciated.

 

[Triest123]

I thought I would try to find an Accountant Forum for some tutor assistance.

I have looked all over the internet since Wednesday, asked the instructor, on LinkedIn, and now here on how to figure this out.

PROBLEM:

Kate Greenway Corporation, having recently issued a $20,040,000, 15-year bond issue, is committed to make annual sinking fund deposits of $624,600. The deposits are made on the last day of each year and yield a return of 10%. Will the fund at the end of 15 years be sufficient to retire the bonds?

Answer is No.


If not, what will the deficiency be?

I cannot figure out the deficiency, any help would be appreciated.

=> there will be a shortage of $194,907.93 for retiring the bonds at the end of 15 years