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Suppose your company wishes to set up a sinking fund in order to save enough money in an account so that it can repay bondholders
Suppose your company wishes to set up a sinking fund in order to save enough money in an account so that it can repay bondholders at some point in the future. Let's assume that your company has issued $ in bonds in years and the interest rate you can earn on your savings account is How much must the company put aside today each year so that at the end of years it will have $ in the account. using the above, if the company needs to save $ but could earn on your money in the savings account. How will that affect your answer. Still using the above, exactly how much would you need to set aside each year to have $ in the savings account if you were earning on your money over years?
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