How much will you save each period with this option

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Question - A company can borrow $740000 for 5 years by issuing bonds, on which interest is paid semi-annually at j111 = 10% and the principal is paid off by making semi-annual payments into a sinking fund earning j = 4%. The other option is to borrow $740000 from a bank and repay the loan over 5 years with equal semi-annual payments at j = 11%. Which option is better and how much will you save each period with this option?

Reference no: EM132911782

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