The John Deere Corporation has issued $10,000,000 in bonds and they are required to set up a sinking fund that will provide enough money to retire 80% of the bond issue when it matures in 25 years. They will make equal semiannual deposits that will earn 9% compounded semiannually. How much money will be in the sinking fund after 20 years?

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The sinking fund needs to accumulate 80% of $10,000,000, which is $8,000,000. Using the future value of an annuity formula for semiannual deposits at 9% compounded semiannually, the amount in the fund after 20 years is $4,796,796.

The John Deere Corporation Has Issued $10,000,000 in Bonds and They