Thermo Tech Systems recently sold a 20 million bond

issue with #3873

Thermo-Tech Systems recently sold a $20 million bond issue with a 20-year maturity and a
coupon rate of 7% compounded semiannually. The bond indenture contract requires Thermo-
Tech to make equal payments at the end of every six months into a sinking fund administered
by National Trust. The sinking fund should accumulate the full $20 million required to redeem
the bonds at their maturity. Round the sinking fund payments and periodic interest earnings to
the nearest dollar.a. What must the size of the sinking fund payments be if the fund earns 4.5%
compounded semiannually?b. How much interest will the fund earn in the sixth year?c. How
much will the fund increase in the twenty-seventh payment interval?d. Construct a partial sin
king fund schedule showing details of the first two and the last two payments, and the total of
the interest earned.View Solution:
Thermo Tech Systems recently sold a 20 million bond issue with

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