a. How many of the coupon bonds would you need to issue to raise the $24 million? How many of the zeros would you need to issue? (Do not round intermediate calculations. Round the final answers to t nearest whole number. Enter the answer in dollars.) Number of coupon bonds to sell Number of zero coupon bonds to sell b. In 30 years, what will be the last cash outflow associated with the coupon bonds? (Do not round ntermediate calculations. Round the final answers to the nearest whole number. Enter the answer in dollars. Omit $ sign in your response.)
a. How many of the coupon bonds would you need to issue to raise the $24 million? How many of the zeros would you need to issue? (Do not round intermediate calculations. Round the final answers to t nearest whole number. Enter the answer in dollars.) Number of coupon bonds to sell Number of zero coupon bonds to sell b. In 30 years, what will be the last cash outflow associated with the coupon bonds? (Do not round ntermediate calculations. Round the final answers to the nearest whole number. Enter the answer in dollars. Omit $ sign in your response.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Am. 394.
Transcribed Image Text:Suppose your company needs to raise $24 million and you want to issue 30-year bonds for this purpose.
Assume the required return on your bond issue will be 9 percent, and you're evaluating two issue
alternatives: An 9 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is
35 percent.
a. How many of the coupon bonds would you need to issue to raise the $24 million? How many of the
zeros would you need to issue? (Do not round intermediate calculations. Round the final answers to the
nearest whole number. Enter the answer in dollars.)
Number of coupon bonds to sell
Number of zero coupon bonds to sell
b. In 30 years, what will be the last cash outflow associated with the coupon bonds? (Do not round
intermediate calculations. Round the final answers to the nearest whole number. Enter the answer in
dollars. Omit $ sign in your response.)
Coupon bonds repayment.
Zero coupon bonds repayment
SA SA
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