Question
18. A $75 million face value bond carrying a 4.45% coupon is issued with 35 years until maturity. The sinking fund provision requires 80% of
18. A $75 million face value bond carrying a 4.45% coupon is issued with 35 years until maturity. The sinking fund provision requires 80% of the face value to be saved up by the maturity date. The sinking fund is projected to earn 4.95% compounded semi-annually.
A. Calculate the total interest earned by the sinking fund.
B. Calculate the annual cost of the bond debt.
C. Determine the book value of the bond debt after the 29th payment.
ANS:
A. $37,087,119.77
B. $3,992,153.70
C. $61,351,698.69
Show ALL your work even if you used a calculator. You MUST use the TI BA II calculator features (N, I/Y, PV, PMT, FV) to solve questions whenever possible.
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
DO NOT answer if you are not using calculator features
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Public Sector Accounting
Authors: Budding, Tjerk, Grossi, Giuseppe, Tagesson, Torbj
1st Edition
0415683149, 9780415683142
