ThermoTech 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 ThermoTech 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 27^th payment interval?
d) Construct a partial sinking fund schedule showing details of the first two and the last two payments, and the total of the interest earned.

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The Answer of ThermoTech 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 ThermoTech 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 27^th payment interval? d) Construct a partial sinking fund schedule showing details of the first two and the last two payments, and the total of the interest earned.

ThermoTech Systems Recently Sold a $20-Million Bond Issue with a 20-Year