Culver Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. 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? $ No
Culver Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to make annual sinking fund deposits of $620,000. 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? $ No
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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![**Culver Corporation Bond Sinking Fund Analysis**
Culver Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to making annual sinking fund deposits of $620,000. These deposits are made on the last day of each year and yield a 10% return.
[Click here to view factor tables]
**Analysis Question:**
- Will the fund at the end of 15 years be sufficient to retire the bonds?
**Calculation Requirement:**
- **Future value of an ordinary annuity:** \$ [Input box for amount]
**Decision:**
- **Will funds be sufficient?** [Dropdown menu with options "No" and another option]
This text is intended to guide financial analysis involving future value calculations for a structured financial plan.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3aff2365-9f44-4770-b8e3-e2ed0988bbf7%2F4327b295-f50a-48fc-a58a-787d5c4f76f4%2Fg6kaudj_processed.png&w=3840&q=75)
Transcribed Image Text:**Culver Corporation Bond Sinking Fund Analysis**
Culver Corporation, having recently issued a $20,062,200, 15-year bond issue, is committed to making annual sinking fund deposits of $620,000. These deposits are made on the last day of each year and yield a 10% return.
[Click here to view factor tables]
**Analysis Question:**
- Will the fund at the end of 15 years be sufficient to retire the bonds?
**Calculation Requirement:**
- **Future value of an ordinary annuity:** \$ [Input box for amount]
**Decision:**
- **Will funds be sufficient?** [Dropdown menu with options "No" and another option]
This text is intended to guide financial analysis involving future value calculations for a structured financial plan.
Expert Solution
Information;
Annual payment (C) = $620,000
Rate of return (r) = 0.10
Period (n) = 15 Years
Future value of ordinary annuity = ?
We will use future value of ordinary annuity formula.
Future value is the compounded value of all the payments made.
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