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Suppose that a small corporation wishes to build an office building and finance by issuing a 20-year bond at an annual interest rate of 10% to be paid annually. The construction will require three years and cost a total of $15 million, assuming that $5 million is spent at the end of each year. Short term cash funds can be deposited in an account having a 10% annual interest rate. The principal will be repaid at the end of 20 years. The activation fee for issuing the bond is $200,000. Estimate the present value of the financing plan at MARR 15%.

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Financial Management, Finance

Category:- Financial Management
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