On January 1, 2021, Grace Corp. created a special building fund by depositing a single sum of P300,000 with a Trust Company. The purpose of the fund is to provide resources to build another wing of a building that is expected to be completed by the end of 2025. The company estimates a total expenditure of P1.5 million and completion by January 1, 2026. Grace Corp. plans to make annual deposit from December 31, 2021 to 2025 to accumulate the required P1.5 million. The Trust Company will increase the fund each December 31 at an interest rate of 8%. Both the accounting period of the company and the fund end on December 31. Based on the above and the result of your audit, answer the following (Round off present and future value factors to four decimal places and final answer to the nearest peso): 1. How much is the annual deposit to the fund? 2. How much is the fund balance as of December 31, 202
Case 2 – Building Fund
On January 1, 2021, Grace Corp. created a special building fund by depositing a single sum of P300,000 with a
Trust Company. The purpose of the fund is to provide resources to build another wing of a building that is expected
to be completed by the end of 2025. The company estimates a total expenditure of P1.5 million and completion
by January 1, 2026.
Grace Corp. plans to make annual deposit from December 31, 2021 to 2025 to accumulate the required P1.5
million. The Trust Company will increase the fund each December 31 at an interest rate of 8%. Both the accounting
period of the company and the fund end on December 31.
Based on the above and the result of your audit, answer the following (Round off present and future value
factors to four decimal places and final answer to the nearest peso):
1. How much is the annual deposit to the fund?
2. How much is the fund balance as of December 31, 2021
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