Reference no: EM132981185

Questions -

Q1. The bond indenture requires an accumulation of funds of P5,000,000 in 5 years. The first annual contribution to the fund is made on December 31, 2020, and every December 31 thereafter. The interest cost is 10%.

The table of present value and the future amount shows the following factors:

Present value of an ordinary annuity of 1 at 10% for 5 periods 3.7908

Future amount of an ordinary annuity of 1 at 10% for 5 periods 6.1051

Required -

1. Compute the annual contribution to the fund.

2. Prepare a schedule of the fund accumulation.

Q2. On January 1, 2020, Carr company adopted a plan to accumulate funds for environmental improvement beginning July 1, 2020, at an estimated cost of P2,000,000. Carr company plans to make for equal annual deposit in a fund that will earn interest an 10% compounded annually. The first deposit is made on July 1, 2020 and every July thereafter. Future amount factors are as follows:

Future amount of ordinary annuity of 1 at 10% for 4 periods 4.6410

Future amount of annuity in advance of 1 ar 10% for 4 periods 5.1051

Required -

1. Compute the annual deposit to the fund.

2. Schedule of fund accumulation.