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Mitchell Meat Packaging has been in business for nearly 10 years working out of the same facility. Their business has grown over the years to
Mitchell Meat Packaging has been in business for nearly 10 years working out of the same facility. Their business has grown over the years to a point where they must expand their facilities in order to keep up with demand. The company has issued bonds worth 5175,000 paying an 8% coupon rate semi-annually for five years to fund the expansion with minimal impact on current production. Mitchell Meat Packaging will establish a sinking fund to retire this debt in five years by making deposits into the fund at the end of every six months. Interest for the fund is 6.93% compounded quarterly. a. What is the size of the semi-annual sinking fund payment? b. What is the periodic cost of the debt to Mitchell Meat Packaging? c. What is the book value of the debt after three years? d. Calculate the increase in the sinking fund balance in the second year. e. Prepare a complete sinking fund schedule. Express totals at the bottom of each column as currency. f. How much of the maturity value in the fund will be interest
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