A corporation sold 5,000 issues of 20-year bonds, having a total face value of

P5,000,000, for P4,750,000. The bonds bear interest at 10%, payable semiannually.

a) The company wishes to establish a sinking fund for retiring the bond issue and

will make semiannual deposits that will earn 8% compounded semiannually.

Compute the annual cost for interest and redemption of these bonds.

b) If an investor wishes to dispose of his 100 shares of his bonds at the end of the

10th year, at what price must he sell his bond to give him a profit of 15% nominal

on his investment?