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The Sun City acquires equipment on January 1, 1976 at a cost of $200,000. The equipment has an estimated life of five years and a
The Sun City acquires equipment on January 1, 1976 at a cost of $200,000. The equipment has an estimated life of five years and a scrap value at the end of that time of 15%. A sinking fund is to be created to provide for the replacement of the equipment at the end of five years. The first deposit is to be made to the fund on December 31, 1976. It is believed that the fund will earn 4% interest annually. On this basis, actuarial deposit requirements are found to be $31,386.61. It is provided that if the earnings of a period should be other than 4%, the deposit made at the end of the period shall be increased for an interest shortage or decreased for an interest overage. Assume that the fund earned 4.5% during 1977, and 4% thereafter until January 1, 1980, when the earning rate became 3.5%. What is the deposit to be made in the fund at the end of the 1977
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