Computing Annuity Amounts to a Debt Retirement Fund

On January 1, Chang Inc. establishes a bond sinking fund (a bond retirement fund) amounting to $150,000. A trustee has agreed to handle the fund and to increase it each year on a 5% annual compound interest basis. Chang is to make equal annual contributions to the fund during the next four years, starting this year.

• In answering the following questions, round your answer to the nearest whole number.
• Do not use negative signs with your answers.

a. Compute the amount of the required annual deposits assuming payments begin on December 31 of this year.

$ Answer

b. Compute the amount of the required annual deposits assuming payments begin on January 1 of this year.

$ Answer