If the Company is required to make equal monthly payments into a sinking fund that will be used to pay off the amount that will be due at maturity of their bond issue and they wish to calculate what that payment will be, they will be determining

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Making equal monthly payments into a sinking fund is an example of an ordinary annuity, where payments occur at the end of each period. The calculation of the payment amount involves determining the present value of the future lump sum payment due at maturity of the bond issue, and then setting the periodic payment amount such that it will grow to that future value over the remaining time period.

If the Company Is Required to Make Equal Monthly Payments