Question: Module 20: Long-Term Financing 1. Why do public organizations use municipal bonds to finance long-term capital projects? 2. A major urban center is planning to

Module 20: Long-Term Financing 1. Why do public organizations use municipal bonds to finance long-term capital projects?

2. A major urban center is planning to issue a $100 million, 20-year, semiannual-interest-paying municipal bond for the construction of a stadium.

a. The interest rate is 5.875%, based on the economic and financial conditions of the city and city government.

b. The design and issuance costs are estimated to be $10 million and 1%, respectively.

c. What is the total interest paid if the city decides to adopt a level debt service structure?

d. How much will the city still owe on this bond at the end of each year?

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