GP&L sold $1,000,000 of 12%, 30year, semiannual payment bonds 15 years ago. The bonds are not callable, but they do have a sinking fund which required GP&L to redeem 5% of the original face value of the issue each year ($50,000), beginning in year 11. To date, 25% of the issue has been retired. The company can either call bonds at par for sinking fund purposes or purchase bonds on teh open market, spending sufficient money to redeem 5% of the original face value each year. If the nominal yeild to maturity (15years remaining) on the bonds is currently 14%, what is the least amount of money GP&L must put up to satisfy the sinking fund provision?
2006-06-29
11:57:36
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4 answers
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asked by
Claudia
2