122. 15 years earlier, GP&L issued $1,000,000 in 12 percent, 30-year, semiannual payment notes. The bonds are not callable, but they do have a sinking fund that allows GP&L to repay 5% of the problem's initial face value ($50,000) per year starting in Year 11 before the issue is fully redeemed. Up to this stage, 25% of the topic has been retired. The corporation will either call bonds at par for sinking fund purposes or buy bonds in the open market, paying enough funds per year to repay 5% of the initial face value. What is the smallest sum of capital GP&L would put up to meet the sinking fund clause if the nominal yield to maturity (15 years remaining) on the bonds is actually 14 percent? a. $43,856 b. $50,000 c. $37,500 d. $43,796 e. $39,422
122. 15 years earlier, GP&L issued $1,000,000 in 12 percent, 30-year, semiannual payment notes. The bonds are not callable, but they do have a sinking fund that allows GP&L to repay 5% of the problem's initial face value ($50,000) per year starting in Year 11 before the issue is fully redeemed. Up to this stage, 25% of the topic has been retired. The corporation will either call bonds at par for sinking fund purposes or buy bonds in the open market, paying enough funds per year to repay 5% of the initial face value. What is the smallest sum of capital GP&L would put up to meet the sinking fund clause if the nominal yield to maturity (15 years remaining) on the bonds is actually 14 percent?
a. $43,856
b. $50,000
c. $37,500
d. $43,796
e. $39,422
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