On January 1, 2016 Central City issued a 20-year serial bond to finance improvements to its water distribution system.A total of $80,000,000 face value of bonds were issued with coupon(interest) and maturity rates as follows.

Central City received a total of $80,500,000 from the bond issue. It received a premiumof $500,000 because the market reacted favorably to the issue.

Assignment:

Use excel to determine the value for Net Interest Cost and the True Interest Cost for the bond issue.

Principal Amount Paid Maturity Date Interest Rate Off December 31, 2020 3.0% 5,000,000 December 31, 2025 3.5% 5,000,000 December 31, 2030 4.0% 10,000,000 December 31, 2031 4. 1% 10,000,000 December 31, 2032 4.2% 10,000,000 December 31, 2033 4.3% 10,000,000 December 31, 2034 4.4% 15,000,000 December 31, 2035 4.5% 15,000,000