At the Beginning of 2017, Lisa Co

question 73

Essay

At the beginning of 2017, Lisa Co. issued bonds with a face value of $700,000 due on December 31, 2023. The company desires to accumulate a fund to retire these bonds at maturity by making equal annual deposits beginning on December 31, 2017.
Required:
Compute the amount that the company must deposit at the end of each year, assuming that the fund will earn 10%
interest a year compounded annually and seven deposits are made.

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Definitions:

Binding Price Floor

A government or regulatory-imposed price control set above the equilibrium price, which prevents the market price from falling below that level.

Potential Sellers

Potential sellers are individuals or entities that may be willing to sell goods or services under the right conditions.

Price Floor

A government-imposed minimum price charged on a product, below which it cannot be sold to prevent market prices from falling too low.

Surplus

An excess of revenues over expenses in a budget, or an excess of goods or materials than what is needed.