Solution: What was the principal in the fund at the end of the 12th year?

A company issued 50 bonds of P1,000.00 face value each, redeemable at par at the end of 15 years to accumulate the funds required for redemption. The firm established a sinking fund consisting of annual deposits, the interest rate of the fund being 4%.

What was the principal in the fund at the end of the 12th year?

Problem Statement: ME Board April 1998

A company issued 50 bonds of P1,000.00 face value each, redeemable at par at the end of 15 years to accumulate the funds required for redemption. The firm established a sinking fund consisting of annual deposits, the interest rate of the fund being 4%. What was the principal in the fund at the end of the 12th year?

  • A. P38,120.00
  • B. P37,519.00
  • C. P37,250.34
  • D. P37,002.00

Problem Answer:

The principal in the fund at the end of the 12th year is P37,519.00.

Solution:

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