Question

A sinking fund is created for redeming debentures worth 5 lakhs at the end of 25 years.
How much provision needs to be made out of profits each year provided sinking fund
investments can earn interest at 4% p.a.?​

Answer 1

Answer:

The answer is :-

Step-by-step explanation:

Using formula of sinking fund

M=

r

A

[(1+r)

n

−1]

⟹1000=

0.04

A

[(1+0.04)

25

−1]⟹A=2408.19

Answer 2

Using formula of sinking fund

Step-by-step explanation:

M=

r

A

[(1+r)

n

−1]

⟹1000=

0.04

A

[(1+0.04)

25

−1]⟹A=2408.19