Suppose the total bond issue by Telus Corp. was $155 000 000 and they set up a sinking fund on issue date at July 23, 2015, for 25 years. Sinking funds are accounts that companies establish to ensure certain amounts of money will be available at a given future date (refer to section 15.5 for information about sinking funds). If the rate of interest is 2.85 percent compounded semi-annually and they make annual end of year payments into the fund:

(a) What is the required annual end-of-year payment for Telus Corp.?

(b) Complete the following table for the Telus Corp.’s sinking fund for each of the payments shown:

Transcribed Image Text:

Interest Total Balance Payment Payment Earned Increase in Numbers Amount on Fund in Fund Fund 17 18 19