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YMMV Inc. issues a bond with a face value of $5,000,000 with a coupon rate of 1.750% maturing in 20 years. The current yield rate is r(¹2) = 8.000%. TFC will secure the bond by making semi-annual deposits into a sinking fund paying 2.250% compounded annually. YMMV defaults on the bond after 18 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $31,000.72. O b. $29,354.67. O c. $26,062.55. O d. $27,434.27. O e. $25,239.53.

YMMV Inc. issues a bond with a face value of $5,000,000 with a coupon rate of 1.750% maturing in 20 years. The current yield rate is r(¹2) = 8.000%. TFC will secure the bond by making semi-annual deposits into a sinking fund paying 2.250% compounded annually. YMMV defaults on the bond after 18 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $31,000.72. O b. $29,354.67. O c. $26,062.55. O d. $27,434.27. O e. $25,239.53.

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...
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YMMV Inc. issues a bond with a face value of $5,000,000 with a coupon rate of 1.750% maturing in 20 years. The current yield rate is r12) = 8.000%. TFC will secure the bond by making semi-annual deposits into a sinking fund paying 2.250% compounded annually. YMMV defaults on the bond after 18 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $31,000.72. O b. $29,354.67. O c. $26,062.55. O d. $27,434.27. O e. $25,239.53.
Transcribed Image Text:YMMV Inc. issues a bond with a face value of $5,000,000 with a coupon rate of 1.750% maturing in 20 years. The current yield rate is r12) = 8.000%. TFC will secure the bond by making semi-annual deposits into a sinking fund paying 2.250% compounded annually. YMMV defaults on the bond after 18 years (just after making their coupon payment, and sinking fund deposit). The bondholders receive the balance in the sinking fund. How much money do they lose? O a. $31,000.72. O b. $29,354.67. O c. $26,062.55. O d. $27,434.27. O e. $25,239.53.
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