Multiple Choice
The Florida Boosters Association has decided to build new bleachers for the football field.Total costs are estimated to be $1 million,and financing will be through a bond issue of the same amount.The bond will have a maturity of 20 years,a coupon rate of 8 percent,and has annual payments.In addition,the Association must set up a reserve to pay off the loan by making 20 equal annual payments into an account which pays 8 percent,annual compounding.The interest-accumulated amount in the reserve will be used to retire the entire issue at its maturity 20 years hence.The Association plans to meet the payment requirements by selling season tickets at $10 net profit per ticket.How many tickets must be sold each year to service the debt,i.e. ,to meet the interest and principal repayment requirements?
A) 5,372
B) 10,186
C) 15,000
D) 20,459
E) 25,000
Correct Answer:
Verified
Correct Answer:
Verified
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