Calculate the size of the periodic payments deposited

Assignment Help Business Management

Reference no: EM133638046

Question

1. Sepia Inc. issued bonds for $325,000 that were redeemable in 10 years. They established a sinking fund that was earning 4.24% compounded semi-annually to pay back the principal of the bonds on maturity. Deposits were being made to the fund at the end of every 6 months.

a. Calculate the size of the periodic sinking fund deposit.

b. Calculate the sinking fund balance at the end of the payment period 16.

c. Calculate the interest earned in payment period 17.

d. Calculate the amount by which the sinking fund increased in payment period 17.

2. A $27,500 bond loan was cleared in 5 years by setting up a sinking fund that was earning 5.50% compounded semi-annually. The deposits were made to the fund at the end of every 6 months.

a. Calculate the size of the periodic payments deposited.

b. What was the total interest earned by the fund?

Reference no: EM133638046

Questions Cloud

Affect mortgage interest rates : Provide a brief description of the five risks that affect mortgage interest rates (default, interest rate, prepayment, liquidity, and legislative).

Present value of investment given your expectations : You expect to pay out $12,000 as a disposal cost in the fourth year. What is the net present value of this investment given your expectations?

Receive full social security retirement benefit : Amanda is expected to receive full social security retirement benefit of $15500 annually when she turns 65.

What price would you be willing to pay for the bond : what price would you be willing to pay for the bond? What happens if you pay more for the bond? What happens if you pay less for the bond?

Calculate the size of the periodic payments deposited : Calculate the interest earned in payment period 17. Calculate the size of the periodic payments deposited. What was the total interest earned by the fund?

Compared to active bond investment strategy : Critically explain how an investor generate return under a passive bond investment strategy compared to an active bond investment strategy.

Basic government financial statements : In reviewing the basic government financial statements, what types of issues and or confusion might evolve out of the use and deciphering of these statements?

International capital budgeting for multinational enterprise : Which of the following factors complicate international capital budgeting for the multinational enterprises?

What is closing stock price on the last business : What is the closing stock price on the last business date of the fiscal year end 2023 for the company Cardinal Health

User Account

All Pages