Thermo-Tech Systems recently sold a $20 million bond issue with a 20-year maturity and a coupon rate of 7% compounded semiannually. The bond indenture contract requires Thermo-Tech to make equal payments at the end of every 6 months into a sinking fund, which should accumulate the full $20 million required to redeem the bonds at their maturity. (Round all values to nearest $). a. What should be the size of the sinking fund payments if the fund earns 4.5% compounded semiannually? b. How much will the fund earn in the sixth year?. How much will the fund increase in the 27th payment interval? d. What is the semiannual cost of the debt

Thermo-Tech Systems recently sold a $20 million bond issue with a 20-year maturity and a coupon rate of 7% compounded semiannually. The bond indenture contract requires Thermo-Tech to make equal payments at the end of every 6 months into a sinking fund, which should accumulate the full $20 million required to redeem the bonds at their maturity. (Round all values to nearest $). a. What should be the size of the sinking fund payments if the fund earns 4.5% compounded semiannually? b. How much will the fund earn in the sixth year?. How much will the fund increase in the 27th payment interval? d. What is the semiannual cost of the debt

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 9P

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