Effective Writing 10th Edition by Claire May,Gordon May

Exercise 1

Daniel Gordon, the president of the Skinner Company, is considering a bond issue to raise $1,000,000 for the company. Mr. Gordon notes that long-term Treasury bonds yield 3%, which he thinks is a good loan rate. Before proceeding with the bond issue, however, Mr. Gordon wants to know more about it. Specifically, he wonders what the annual interest payments would be on the bonds.
You are a financial analyst at Skinner Company. Write a memo to Mr. Gordon explaining what the interest payments on a $1,000,000, 20-year bond issue would be if the bonds were issued at a 3% yield. Also, explain in your memo why the Skinner Company would probably not be able to issue the bonds at 3%.