A Firm Issues $500 Million in Twenty-Year Bonds with an Annual

question 22

Multiple Choice

A firm issues $500 million in twenty-year bonds with an annual coupon rate of 5%.The firm uses a sinking fund to repurchase 4% of the bond issue on each coupon payment date.What payment must they make on the first coupon payment date?

• A)$20 million
• B)$25 million
• C)$35 million
• D)$45 million
• E)$145 million

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