3. Toronto City Council is trying to decide whether or not to fund a new stadium for the local Major League Soccer (MLS) team. The new stadium is expected to cost $100 million and is expected to last for 30 years. After 30 years, they expect the building to be worthless.

Toronto City Council wants to distribute the cost of the stadium over the entire time period of 30 years so they issue a 30-year municipal bond and offer a return of 2%. The city will pay equal annual interest payments to bondholders. Calculating the annual payments that the city will pay based on the following equation:

P= B 1-(l+rf r