Explore BrainMass
Share

Explore BrainMass

    Annual deposit for a sinking fund

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    My company had establish a sinking fund for its outstanding preferred stock issue. $543,219,876 is the total amount that will be retired in 26 years. At the beginning of each of these 26 years, My company will deposit and equal amount into an account that will earns 4%. What is the value of this periodic deposit? Show Computations.

    © BrainMass Inc. brainmass.com October 10, 2019, 1:21 am ad1c9bdddf
    https://brainmass.com/business/annuity/annual-deposit-sinking-fund-331479

    Solution Preview

    The periodic deposit would be such that the future value of the deposit is equal to the amount needed in 26 years which hs $543,219,876.

    We use the FV of annuity formula. The ...

    Solution Summary

    The solution explains how to calculate the amount of annual deposit for a sinking fund to retire a preferred stock issue in the future.

    $2.19