Coronado Corporation having recently issued a 20139700 15yea

Coronado Corporation, having recently issued a $20,139,700, 15-year bond issue, is committed to make annual sinking fund deposits of $616,500. The deposits are made on the last day of each year and yield a return of 10%. Click here to view factor tables Will the fund at the end of 15 years be sufficient to retire the bonds? Future value of an ordinary annuity Will funds be sufficient? LINK TO TEXT LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR EXERCISE Coronado Corporation, having recently issued a $20,139,700, 15-year bond issue, is committed to make annual sinking fund deposits of $616,500. The deposits are made on the last day of each year and yield a return of 10%. her w fac Determine the amount of deficiency. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to o decimal places, e.g. 458,581.) Deficiency$

Solution

Future Value of an ordinary annuity = $ 1,95,87,734 Will the funds be sufficient = No Deficiency = $ 5,51,966 Workings: Future Value of an ordinary annuity of $6,16,500 at 10% for 15 years ($6,16,500 X 31.77248) = $ 1,95,87,734 No, the funds will not be sufficient. Deficiency = $2,01,39,700 - $1,95,87,734 = $ 5,51,966