Question
A firm issues $500 million in twenty-year bonds with an annual coupon rate of 5%. The firm makes a final payment of $145 million on
A firm issues $500 million in twenty-year bonds with an annual coupon rate of 5%. The firm makes a final payment of $145 million on the tenth and final coupon date. If the firm uses a sinking fund to repurchase some of the bond issue on each coupon payment date, what percentage of the issue must they repurchase each year?
| a | 4.1% |
| b | 4% |
| c | 3.7% |
| d | 3.8% |
| e | 3.9% |
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Health Care Finance Basic Tools For Nonfinancial Managers
Authors: Judith J. Baker, R.W. Baker
4th Edition
1284029867, 978-1284029864
