A sinking fund is established which means they set aside the of this money to be redeemed and plan to invest it.

future value

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present value

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interest value

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market value

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Solution

The correct option is B present value
A sinking fund is established which means they set aside the present value of this money to be redeemed and plan to invest it. A sinking fund is formed so the company can contribute to the fund in the years leading up to the debentures' maturity.

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A sinking fund is established which means they set aside the _____________________ of this money to be redeemed and plan to invest it.

Q. Jasmine needs Rs. 30 to buy a sweater. She uses the following plan to save money. The first day she sets aside Rs. 1. The second day Jasmine sets aside Rs. 1.50. The third day she sets aside Rs. 2, and on the fourth day she sets aside Rs. 2.50. If Jasmine continues this pattern, on which day will she have enough money to buy the sweater ?

On April 01, 2014 a company issued 15% debentures of Rs 10,00,000 at par. The debentures were redeemable at par after three years from the date of Issue. A sinking fund was set up to raise funds for redemption of debentures. The amount for the purpose was invested in 6% Government securities of Rs 100 each available at par. The sinking fund table shows that if investments earn 6% per annum, to get Re.1 at the end of 3 years, one has to invest Rs 0.31411 every year together with interest that will be earned. On March 31, 2017, all the Government securities were sold at a total loss of Rs 6,000 and the debentures were redeemed at par.

Prepare Debentures Account Sinking Fund Account, Sinking Fund Investment Account and Interest on Sinking Fund Investment Company closes its books of accounts every year on March 31.

Which account is to be debited to set aside funds for debenture redemption?

Q. A machine costs Rs.

60, 000

and its effective life is estimated to be

25

years. A sinking fund is to be created for replacing the machine at the end of its life time when its scrap value is estimated as Rs.

5, 000

. The price of the new machine is estimated to be

100 %

more than the price of the present one. Find the amount that should be set aside at the end of each year, out of the profits, for the sinking fund if it accumulates at an interest of

6 %

per annum compounded annually.

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A sinking fund is established which means they set aside the of this money to be redeemed and plan to invest it.

The correct option is B present valueA sinking fund is established which means they set aside the present value of this money to be redeemed and plan to invest it. A sinking fund is formed so the company can contribute to the fund in the years leading up to the debentures' maturity.

The correct option is B present value
A sinking fund is established which means they set aside the present value of this money to be redeemed and plan to invest it. A sinking fund is formed so the company can contribute to the fund in the years leading up to the debentures' maturity.