Deposit money in bank to retire bond issue

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Reference no: EM13873586

Amarua Corp is required to deposit money in a bank to retire a bond issue of $10 million paying its bondholders a coupon rate of 6%. The bank is currently paying 8% on deposited funds. The bond agreement states on the original 30 year bond issue. Amarua is required to make deposits each year in the last 20 years of the life of the bond. What is the amount of Amarua's annual deposits?

A. 218,522

B. 101,853

C. 425,387

D. 462,950

Reference no: EM13873586

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