Module 20: Long-Term Financing 1. Why do public organizations use municipal bonds to finance long-term capital...

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Module 20: Long-Term Financing 1. Why do public organizationsuse municipal bonds to finance long-term capital projects?
2. A major urban center is planning to issue a $100 million,20-year, semiannual-interest-paying municipal bond for theconstruction of a stadium.
a. The interest rate is 5.875%, based on the economic andfinancial conditions of the city and city government.
b. The design and issuance costs are estimated to be $10 millionand 1%, respectively.
c. What is the total interest paid if the city decides to adopta level debt service structure?
d. How much will the city still owe on this bond at the end ofeach year?

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1Municipal bonds are the debt securities issued by thestatescitiescountries other govertmental entities to fundday to day obligation and to finance capital projects such asbuilding school sewer systemGenerally interest on municipal bonds See Answer

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