A Firm Issues $500 Million in Twenty-Year Bonds with an Annual

Multiple Choice

A firm issues $500 million in twenty-year bonds with an annual coupon rate of 5%.The firm uses a sinking fund to repurchase 4% of the bond issue on each coupon payment date.What payment must they make on the twentieth and final coupon payment date?

A) $25 million
B) $120 million
C) $145 million
D) $160 million
E) $200 million