A company issued bonds worth $750,000, with a coupon rate of 7% compounded semi-annually, and set up a sinking fund to retire the debt in 15 years. It made deposits at the end of every 6 months into the fund, and the fund was earning 8.2% compounded semi-annually. Find the periodic expense of the debt. Find the book value of the debt after 8 years. Construct the sinking fund schedule for the 10th year.

1. Find the periodic expense of the debt.

PMT Setting
N
I/Y
P/Y
C/Y
PV
PMT
FV

2. Find the book value of the debt after 8 years.

PMT Setting
N
I/Y
P/Y
C/Y
PV
PMT
FV

3. Construct the sinking fund schedule for the 10th year.

Payment Number	Periodic Payment	Interest for Payment Interval	Increase in Fund	Fund Balance	Book Value

Answer rating: 100% (QA)

Part a Assumed that the bond pays interest semi annually Periodic expense of debt Semi annual intere... View the full answer