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(3) You are the CEO of an SPV that is planning to build a suspension bridge. You are evaluating the debt service payment for the
(3) You are the CEO of an SPV that is planning to build a suspension bridge. You are evaluating the debt service payment for the fourth year and decided to create a debt service reserve account to make this payment. - The base amount of the fourth year service debt in today's USD is 2 million (in constant dollars, not including the cover ratio). - The expected annual average inflation rate for the following four years is 5%. - You found a great deal: market interest rate is 8% compounded quarterly (for the debt service reserve account). Calculate the minimum quarterly installment to be deposited in the debt service reserve account for the following four years to satisfy a cover ratio of 1.4
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