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What amount must the company add to the sinking fund

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Question - Ozona Minerals issued bonds that mature in 10 years. As is typical for bonds, Ozona Minerals must pay interest only on the $250 million face value. As part of the bond indenture, Ozona Minerals must make annual payments to a sinking fund, which is a pool of money set aside to help repay the bond issue. The sinking fund must be equal to 50% of the face value of the bonds in 10 years (at maturity). If Ozona Minerals can invest at 5%, what amount must the company add to the sinking fund each year to comply with the sinking fund requirement?

Reference no: EM133048343

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