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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none of these

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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 .

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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.

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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 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 .

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 .