HIGHWAY BONDS. 19 
For the same bond issue under the serial plan, the total annual 
payment varies because the interest varies, but each yearly payment 
of interest and principal is nevertheless fixed. 
Under the sinking-fund plan the annual payment necessary for prin- 
cipal and interest is theoretically constant, but it depends upon the 
interest realized upon the sinking fund. It is not safe, as a rule, to 
estimate this interest at more than 34 percent. Then for a $100,000 
20-year loan, with annual interest on the sinking fund, the total 
annual payment would be $8,536.11. If the sinking fund could earn 
the rate of interest which is paid upon the loan there would be no 
advantage in expense to the community in the annuity or the serial 
bond over the sinking-fund bond. There is given in Table 13 the 
total mill tax on $1 to retire a bond issue of $100,000 by the sinking 
fund or the annuity plan. 
TABLE 13.—Annual mill tax on $1 for interest and retirement on a bond issue of $100,000, 
at 5 per cent annual interest, for terms of 10 and 20 years. 
Mill tax. 
10 years. 20 years. 
Valuation. | | 
Sinking-fund plan. Sinking-fund plan.t 
| Annuity | Annuity 
S DCE si teos DeL 4 per | plan? | 3 per 33 per 4 per plan.? 
cent. cent. centeay| i eent:: cent. cent. 
$1, 000, 000 iB yy 13.524 13.329 | 12. 950 8. 722 8. 536 8.358 8.024 
1,500, 000 9.149 9.016 8. 886 8. 634 5. 814 5.691 5.572 5. 350 
2,000, 000 6. 861 6. 762 6.665 6.475 4.361 4, 268 4.179 4.012 
2, 500, 000 5.489 5. 410 5. 332 5.180 3.489 3.414 3.343 3.210 
3, 000, 000 4.57 4.508 4. 443 | 4.317 2.907 2. 845 | 2. 786 2.675 
3, 500, 000 3.921 3. 864 3. 808 3.700 | 2.492 2. 439 | 2.388 | 2.293 | 
4,000, 000 3.431 3.381 3.332 3. 238 2.180 2.134 2.090 2.006 
4,500, 000 3.050 3.005 2.962 2. 878 1.938 1. 897 1. 857 ee 7Ssu 
5, 000, 000 2.745 2.705 2. 666 | 2.590 1. 744 1. 707 1.672 1.605 
| 5,500,000 2.495 2.459 2.423 | 2.355 1.586 1.552 1.520 1.459 | 
| 6,000,000 2. 287 2. 254 2. 222 | 2.158 | 1.454 1. 423 1.393 Wassyvy 4) 
| 6,500,000 2.111 2.081 2.051 1.992 1.342 1.313 1. 286 1.235 | 
| 7.000.000 1. 960 1.932 1.904 1. 850 1. 246 1. 219 1.194 1.146 
| 7,500,000 1. 830 1. 803 Peed eT BA 1.163 1.138 1.114 1.07 
8, 000, 000 1 715 1.691 1. 666 1.619 1.090 1. 067 1.045 1.003 
8, 500, 000 1.614 1.591 1.568 1.524 1.026 1.004 - 983 . 944 
9,000, 000 1.525 1.503 1.481 1. 439 . 969 . 948 929 892 
9, 500, 000 1. 445 1.424 1. 403 1.363 918 899 S80 845 
10, 000, 000 1.372 Ped? 1.333 1. 295 872 854 836 802 
} ] 
1 With interest compounded annually. 
2 The tax for the serial plan is slightly less, but varies from year to year. 
It is quite probable that so many 30-year bonds are issued in order 
to take advantage of the fact that bonds of that term result in a low 
annual charge for interest and sinking fund. It will be seen from 
Table 14 that very little advantage is gained by fixing the term of a 
bond longer than 30 years. The annual charge decreases very slowly 
from that point, whereas the total charge increases rapidly. 
