XYZ Co. issues $1300000 of bonds for 15 years at a rate of ja = 6.5%....

 

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XYZ Co. issues $1300000 of bonds for 15 years at a rate of ja = 6.5%. The bonds are set up in a manner that the issuer will make quarterly interest payments and repay the original principal as one lump sum payment at maturity. XYZ Co. decides it wants to create a sinking fund in order to redeem the bonds. If the fund is invested at a rate of j4 = 4.8%, calculate: a) Quarterly expense of debt. Answer: $ b) The book value of the debt after 5 years. Answer: $ XYZ Co. issues $1300000 of bonds for 15 years at a rate of ja = 6.5%. The bonds are set up in a manner that the issuer will make quarterly interest payments and repay the original principal as one lump sum payment at maturity. XYZ Co. decides it wants to create a sinking fund in order to redeem the bonds. If the fund is invested at a rate of j4 = 4.8%, calculate: a) Quarterly expense of debt. Answer: $ b) The book value of the debt after 5 years. Answer: $

Answer rating: 100% (QA)

Sol a Quarterly expense 422... View the full answer