A city has financed a local project with a $500,000 bond issue with a coupon rate of 3% compounded semi-annually. The bonds are redeemable in 12 years. At the same time, a sinking fund earning interest at 4.2% compounded semi-annually is established to accumulate the full $500,000 when the bonds mature in 12 years.

1. Find the periodic expense of the debt.
2. Find the book value of the debt after 7 years.
3. Construct the sinking fund schedule for the 9th year.

1. Find the periodic expense of the debt.

PMT Setting
N
I/Y
P/Y
C/Y
PV
PMT
FV

2. Find the book value of the debt after 7 years.

P1
P2

OR

PMT Setting
N
I/Y
P/Y
C/Y
PV
PMT
FV

3. Construct the sinking fund schedule for the 9th year.

Payment Number	Periodic Payment	Interest for Payment Interval	Increase in Fund	Fund Balance	Book Value