ng fund method than by either of the other methods
described.

=Annuity Bonds.=--Annuity bonds are drawn in such a manner that the
amount of the payment for principle and interest is the same each year
during the life of the bond. When the amount of the issue and the rate
of interest has been determined and the amount of the desired annual
payment has been determined, the number of years the bonds must run is
computed.

This method is convenient in that the amount of the tax to be levied
each year remains constant.

=Serial Bonds.=--Serial bonds are drawn so that a uniform amount of
the principle is retired each year after retirement starts and the
total interest payments decrease each year after the first bonds are
retired. The first bond may not be retired for a number of years after
the issue of the bonds, but when it once starts retirement proceeds at
a constant rate annually.

=Comparison of Methods of Issuing Bonds.=--The relative costs of
financing by either of the three methods depends upon the rate of
interest in each case and the net rate secured on the sinking fund
provided for retiring sinking fund bonds.

For comparative purposes, some typical examples are given in Table 3.
These illustrate the differences in total cost of securing $100,000 by
each of the three methods at various interest rates.

TABLE 3

TOTAL COST OF A LOAN OF $100,000 FOR 20 YEARS, INTEREST
COMPOUNDED ANNUALLY

---------+---------------------------------------+---------+---------
Annual | Sinking Fund Compounded | |
Interest | Annually at | |
on Bonds +----------+----------------+-----------+ Annuity | Serial
|3 per cent| 3-1/2 per cent | 4 per cent| |
---------+----------+----------------+-----------+---------+---------
4 | $154,431 | $150,722 | $147,163 |$147,163 | $142,000
4-1/2 | 164,431 | 160,722 | 157,163 | 153,752 | 147,250
5 | 174,431 | 170,722 | 167,163 | 160,485 | 152,500
5-1/2 | 184,431 | 180,722 | 177,163 | 167,359 | 157,750
6 | 194,431 | 190,722 | 187,163 | 174,369 | 163,000
---------+----------+----------------+-----------+---------+---------

=Desirability of Road Bonds.=--In theory the bond method of financing
enables the highway authorities to construct a large mileage of roads
in a few years and spreads the cost over the period