Question
8. 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
8. 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. Create a partial sinking fund schedule detailing the first two years, last two years, and the 10th and 11th years. b. Calculate the total interest earned by the sinking fund. c. Calculate the annual cost of the bond debt. d. Determine the book value of the bond debt after the 29th payment. By using financial calculator only
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