Business, 02.02.2019 05:10
Amining project has funding requirements over the next four years of $2 million, $4 million, $8million, and $5 million, respectively. assume that all the money for a given year is required atthe beginning of the year. the mining company plans to sell exactly enough long-term bonds tocover the project funding requirements and all of these bonds, regardless of when they are sold,must be paid o in the same distant future year. the cost of selling bonds for the next four yearsare projected to be 7%, 6%, 6.5%, and 7.5%, respectively. bond interest paid commences oneyear after the project is complete and continues for 20 years, after which the bond is paid o .during the same period, the mine can earn 6%, 5.5%, and 4.5%, respectively, on its short-termdeposits. what is the mining company's optimal strategy for selling bonds and depositing fundsin short-term accounts in order to complete the mining project? (note: you can ignore the timevalue of money.