Problem
Julius I. Tornado is the chief operating officer of Green Valley. One day last week he came to your office to discuss the terms of a new bond issue the city plans to sell. The proceeds from these bonds will be used to construct a new city hall and courthouse building. The total estimated cost of the project is $100 million. Tornado feels that as chief finance officer, you should have some input into the terms included in the bond indenture. The bonds will be redeemed in a lump sum at the end of 25 years. The city is barely balancing its budget now, so Tornado is concerned that there will not be enough resources available to pay the interest for the next 25 years and redeem the principal when it comes due.
What recommendations do you have for Tornado?