Answered: A community wishes to purchase an…

A community wishes to purchase an existing utility valued at P500,000 by selling 5% bonds that will mature in 30 years. The money to retire the bond will be raised by paying equal a

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 20P

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A community wishes to purchase an existing utility valued at P500,000 by selling 5% bonds that will mature in 30 years. The money to retire the bond will be raised by paying equal annual amounts into a sinking fund that will earn 4%. What will be the total annual cost of the bonds until they mature?

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