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Debt Redemption

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EEM, Inc has a $100,000,000 debt outstanding that is due after 15 years. The contract required that after 5 years, the firm must set aside annually an amount so the debt is retired in full at maturity. If EEM can earn 8 percent on invested funds, how much must the company set aside each year.?

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Solution Summary

The solution computes the amount required to set side to retire bonds at maturity.

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