A City can borrow $400,000, at 8% compounded quarterly or can issue $400,000 of bonds paying interest
Fantastic news! We've Found the answer you've been seeking!
Question:
A City can borrow $400,000, at 8% compounded quarterly or can issue $400,000 of bonds paying interest at 4% compounded quarterly. By law the City must create a sinking fund to retire the bonds at the end of 20 years. If the sinking fund earns 8% compounded quarterly, which is cheaper- getting the loan or issuing the bonds- and by how much each payment period?
Related Book For
Finite Mathematics and Its Applications
ISBN: 978-0134768632
12th edition
Authors: Larry J. Goldstein, David I. Schneider, Martha J. Siegel, Steven Hair
Posted Date: