A) Serene Williams Corporation having recently issued a 20 million, 15 year bond issue, is committed to malke annual sinking fund deposits of 600,000. The deposits are made on last day of eac year and yield a return of 10%. Will the fund at the end of 15 yrs be sufficient to retire the bonds. If not, what will deficiency be?

600,000*.1=60,000 so 540,000*15=8,100,000 that doesnt seem right

so you want the amount of 600 000 at the end of 15 years at 10% p.a.

amount = 600000(1.1)^15
= $ 25 063 348.90

a simple application of the compound interest formula.

To determine whether the sinking fund will be sufficient to retire the bonds, we need to calculate the total amount accumulated through the annual sinking fund deposits over the 15-year period. Here's how you can do it:

Step 1: Calculate the future value of an annuity
The annual sinking fund deposits of $600,000 can be considered as a series of equal cash flows occurring at the end of each year. The future value of this annuity can be calculated using the formula:

FV = PMT * ((1 + r)^n - 1) / r

Where:
FV = Future value of the annuity
PMT = Annual sinking fund deposit (600,000)
r = Annual interest rate (10% or 0.10)
n = Number of years (15)

Using these values, the future value of the annuity is calculated as follows:

FV = 600,000 * ((1 + 0.10)^15 - 1) / 0.10

Step 2: Calculate the deficiency amount
Once you have the future value of the sinking fund, you can determine if it will be sufficient to retire the bonds. If the future value is equal to or greater than the bond value, then the sinking fund will be sufficient. Otherwise, there will be a deficiency.

In your case, you mentioned that the bond issue was for $20 million. Therefore, if the future value of the sinking fund is less than $20 million, there will be a deficiency. You can calculate the deficiency amount by subtracting the future value from the bond value:

Deficiency = Bond value - Future value of the sinking fund

Deficiency = $20,000,000 - Future value of the sinking fund

Now, you can substitute the appropriate values into the equation to calculate the deficiency amount.