PREPARING AND USING AN AMORTIZATION TABLE (STRAIGHT LINE) Dunn-Whitaker Construction has agreed to construct a plant in a new industrial park. To finance the construction, the county government issued $4,000,000 of 10-year, 5.25 percent revenue bonds for $4,100,000 on December 31, 2008. Dunn-Whitaker will pay the interest and principal on the bonds. When the bonds are repaid, Dunn-Whitaker will receive title to the plant. In the interim, Dunn-Whitaker will pay property taxes as if it owned the plant. This financing arrangement is attractive to Dunn-Whitaker, as state and local government bonds are exempt from federal income taxation and thus carry a lower interest rate. The bonds are attractive to investors, as both Dunn-Whitaker and the county are issuers. The bonds pay interest semiannually on June 30 and December 31.
PREPARING AND USING AN AMORTIZATION TABLE (STRAIGHT LINE)
Dunn-Whitaker Construction has agreed to construct a plant in a new industrial park. To finance the construction, the county government issued $4,000,000 of 10-year, 5.25 percent revenue bonds for $4,100,000 on December 31, 2008. Dunn-Whitaker will pay the interest and principal on the bonds. When the bonds are repaid, Dunn-Whitaker will receive title to the plant. In the interim, Dunn-Whitaker will pay property taxes as if it owned the plant. This financing arrangement is attractive to Dunn-Whitaker, as state and local government bonds are exempt from federal income taxation and thus carry a lower interest rate. The bonds are attractive to investors, as both Dunn-Whitaker and the county are issuers. The bonds pay interest semiannually on June 30 and December 31.
Step by step
Solved in 3 steps with 4 images
