16 BULLETIN 136, U. S. DEPARTMENT OF AGRICULTURE. 
of the community are in a way to become much confused. This is 
particularly true since the officers in charge of such operations are 
_ frequently changing. Sinking fund tax levies may be deferred 
through carelessness or under pressure of other needs. The sinking 
fund always requires careful attention, because it does not progress 
automatically in most cases.’ It has sometimes been entirely neg- 
lected. The total cost of a bond issue retired by a sinking fund will 
be greater in the end than the cost of the same bond issue made by 
either the annuity method or by the serial method. 
Annuity bonds.—By the annuity method of issuing bonds both 
the principal and interest are discharged by constant annual or semi- 
annual payments. The amount of each payment or installment is 
determined by the rate of interest and the term of the bond. It usu- 
ally is necessary to subdivide the bond issue into individual bonds of 
$100, $500, or$1,000each. The resulting periodic payment of principal 
and interest must vary slightly because of this adjustment. Tables 8 
and 9 show, in detail, the schedule of principal and interest repayments 
upon a loan of $100,000 for 20 years, retired by this plan at 4 and 5 
per cent per annum, respectively. The necessary adjustment to the 
nearest $100 bond is also shown. It will be seen that the amount of 
principal retired is small at first and constantly increases while the 
interest charge decreases. The sum of interest and principal re- 
mains constant, and this is an advantage as the tax is then uniform. © 
TABLE 8.—Repayment of a 4 per cent $100,000 loan, including both principal and interest, 
by a uniform annual payment of $7,358.175 for 20 years.” 
Adjusted to nearest cent. Adjusted to $100 bonds. 
bene Pee Princi- ae 
Principal Principal : Princi- 
: | Sane Interest eenath et ‘pal owing) Interest |pal repaid’ 
Years <a at begin- Total. 
*| beginning | for year. end of Minaor for year. | at end of 
of year. year. 5 year. 
year. 
1....$100,000.00 | $4,000.00 | $3,358.18 | $100,000 $4, 000 $3,400 | $7,400 
ee 96, 641. 82 3, 865. 67 3, 492. 50 96, 600 3, 864 3, 500 7,364 
See 93, 149. 32 3, 725. 97 3, 632. 21 93, 100 3, 724 3,600 7,324 
Aes 89,517.11 3, 580. 68 3,777. 49 89, 500 3, 580 3,800 | 7,380 
Free. 85, 739. 62 3, 429. 59 3, 928. 59 85, 700 3, 428 3, 900 7,328 
G2 81, 811. 03 3, 272. 44 4,085. 73 81, 800 3, 272 4,100 7,372 
[ieee 77, 725. 30 3,109. 01 4,249.17 77, 700 3,108 4, 200 7,308 - 
Sy 73, 476.13 2,939. 05 4,419.12 73, 500 2,940 4, 400 7,340 
Om 69, 057. 01 2, 762. 28 4,595. 90 69, 100 2,764 4,600 7, 364 
Ox 64, 461.11 2,578. 44 4,779.73 64, 500 2, 580 4,800 7,380 
i ee 59, 681. 38 2, 387. 26 4,970. 92 59, 700 2,388 5, 000 7,388 
1a 54, 710. 46 2,188. 42 5, 169. 75 54, 700 2,188 5, 200 7,388 
p3== 49, 540. 71 1,981. 63 5, 376. 55 49,500 | 1,980 5, 400 7,380 
Aaa 44,164.16 1, 766. 57 5, 591. 60 44,100 | 1, 764 5, 600 7,364 
1G Re) “leno Zao) 1,542. 90 5, 815. 28 38, 500° 1,540 5, 800 7,340 
1G 32, 757. 28 1,310. 29 6, 047.88 32,700 1,308 6, 000 7,308 
life 26, 709. 40 1,068.38 6, 289.80 26, 700 1,068 6,300 7,368 
Tift 20, 419. 60 816.78 6, 541. 39 20, 400 | 816 6, 500 dente 
ge Sa) VES STS. 2k 550. 13 6, 803.05 13, 900 556 6, 800 7,356 
West eee, 7,075.16 283. 01 7,075.16 7,100 284 7,100 7,384 
Peel SF re ete ase 47,163.50 | 100,000.00 }......_---.| 47,152 | 100,000 | 147,152 
1 In some States there are restrictions on the nature of county investments for sinking fund purposes. 
* An additional table showing the annual payments necessary to discharge a loan of $1, with interest 
for varying terms and rates, is given in Table 36 on pages 126 and 127. 
