Question

A) Serene Williams Corporation having recently issued a 20 million, 15 year bond issue, is committed to malke annual sinking fund deposits of 600,000. The deposits are made on last day of eac year and yield a return of 10%. Will the fund at the end of 15 yrs be sufficient to retire the bonds. If not, what will deficiency be?

600,000*.1=60,000 so 540,000*15=8,100,000 that doesnt seem right

Answer 1

so you want the amount of 600 000 at the end of 15 years at 10% p.a.
amount = 600000(1.1)^15
= $ 25 063 348.90

a simple application of the compound interest formula.