Cross Ltd has bought an asset with a life span of 4 years. At the end of the 4 years, replacement of the asset will cost GH¢12,000. In this direction, the company has decided to provide for the future commitment by setting up a sinking fund account into which equal annual investment will be made at the end of each year. Interest rate on the investment will be 12% per annum. Required: i. Calculate the annual instalments ii. Draw up the sinking fund schedule to show the growth fund iii. Assuming the first payments will be made now and 12 months thereafter, what are the annual payments? You are required to draw up the sinking fund schedule .
Cross Ltd has bought an asset with a life span of 4 years. At the end of the 4 years, replacement of the asset will cost GH¢12,000. In this direction, the company has decided to provide for the future commitment by setting up a sinking fund account into which equal annual investment will be made at the end of each year. Interest rate on the investment will be 12% per annum. Required: i. Calculate the annual instalments ii. Draw up the sinking fund schedule to show the growth fund iii. Assuming the first payments will be made now and 12 months thereafter, what are the annual payments? You are required to draw up the sinking fund schedule .
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Cross Ltd has bought an asset with a life span of 4 years. At the end of the 4 years, replacement of the asset will cost GH¢12,000. In this direction, the company has decided to provide for the future commitment by setting up a sinking fund account into which equal annual investment will be made at the end of each year. Interest rate on the investment will be 12% per annum.
Required:
i. Calculate the annual instalments
ii. Draw up the sinking fund schedule to show the growth fund
iii. Assuming the first payments will be made now and 12 months thereafter, what are the annual
payments? You are required to draw up the sinking fund schedule .
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