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A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue?
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A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a ...
Calculation of Annual Interest
To calculate the annual interest, we can use the formula:
Annual Interest = Principal x Rate of Interest
Here, the Principal is the amount of the debenture issue, which is Rs. 5,00,000. The Rate of Interest is 6% p.a. Therefore,
Annual Interest = Rs. 5,00,000 x 6/100 = Rs. 30,000
Calculation of Total Interest
As the company sets aside Rs. 45,000 annually for 9 years, the total fund accumulated over the period will be:
Total Fund Accumulated = Annual Contribution x Number of Years
Total Fund Accumulated = Rs. 45,000 x 9 = Rs. 4,05,000
Therefore, the total interest earned on this fund at 6% p.a. will be:
Total Interest = Total Fund Accumulated - Principal
Total Interest = Rs. 4,05,000 - Rs. 5,00,000 = - Rs. 95,000
As the total interest is negative, it means that the company will not have any surplus after the full redemption of the debenture issue. Instead, it will have a deficit of Rs. 95,000. This is because the annual contribution of Rs. 45,000 is not enough to cover the annual interest of Rs. 30,000, and the company has to dip into the accumulated fund to pay the interest.
To calculate the annual interest, we can use the formula:
Annual Interest = Principal x Rate of Interest
Here, the Principal is the amount of the debenture issue, which is Rs. 5,00,000. The Rate of Interest is 6% p.a. Therefore,
Annual Interest = Rs. 5,00,000 x 6/100 = Rs. 30,000
Calculation of Total Interest
As the company sets aside Rs. 45,000 annually for 9 years, the total fund accumulated over the period will be:
Total Fund Accumulated = Annual Contribution x Number of Years
Total Fund Accumulated = Rs. 45,000 x 9 = Rs. 4,05,000
Therefore, the total interest earned on this fund at 6% p.a. will be:
Total Interest = Total Fund Accumulated - Principal
Total Interest = Rs. 4,05,000 - Rs. 5,00,000 = - Rs. 95,000
As the total interest is negative, it means that the company will not have any surplus after the full redemption of the debenture issue. Instead, it will have a deficit of Rs. 95,000. This is because the annual contribution of Rs. 45,000 is not enough to cover the annual interest of Rs. 30,000, and the company has to dip into the accumulated fund to pay the interest.
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A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue?
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A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue?.
A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A company set's aside a sum of Rs. 45,000 annually for 9 to pay off a debentures issue of Rs. 5,00,000. If the fund accumulated at 6% p.a., find the surplus after full redemption of the debenture issue?.
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