To raise $6,000,000 to expand into new markets, a very successful laptop manufacturing company issued bonds in the market with a coupon rate of 8.00%, paying interest every 6 months, and redeemable in 17 years. They established a sinking fund to retire this debt on maturity and made equal deposits into the fund at the end of every half-year. If the fund was earning 4.20% compounded semi-annually, calculate the periodic cost of the debt. Calculate the book value of the debt after 11 years.

Answer rating: 100% (QA)

Firstly Lets summarize the details for better understanding as below a Total amount raised by the firm by issuing bonds6000000 b Rate of Interest payable for value of bonds issued 8 c The periodicity ... View the full answer