Selling bonds. Lunar Vacations needs to raise $6,300,000 for its new project (a golf course on the moon). AstroInvestment Bank will sell the bond for a commission of 2.6%. The market yield is currently 7.5% on twenty-yearsemiannual bonds. If Lunar wants to issue a 6.5% semiannual coupon bond, how many bonds will it need to sell toraise the $6,300,000? Assume that all bonds are issued at a par value of $1,000....How many bonds will Lunar need to sell to raise the $6,300,000?(Round to the nearest whole number.)

Bond valuation aims to determine the present value of a bond, which includes the principal repayment at maturity and monthly interest payments. This approach assists investors in determining if a bond is priced attractively in relation to its future returns while allowing issuers to make informed decisions regarding coupon rates and terms to offer. It is a fundamental tool for evaluating investment opportunities and making strategic financial decisions.The number of bonds to be sold is determined by dividing the amount to be raised by the value of the bond after commission.Calculation:Result:Therefore, the number of bonds to be sold is 7209.

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How many bonds will Lunar need to sell to raise the $6,300,000? (Round to the nearest whole number.)

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 1CE

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Question

Selling bonds. Lunar Vacations needs to raise $6,300,000 for its new project (a golf course on the moon). Astro
Investment Bank will sell the bond for a commission of 2.6%. The market yield is currently 7.5% on twenty-year
semiannual bonds. If Lunar wants to issue a 6.5% semiannual coupon bond, how many bonds will it need to sell to
raise the $6,300,000? Assume that all bonds are issued at a par value of $1,000.
...
How many bonds will Lunar need to sell to raise the $6,300,000?
(Round to the nearest whole number.)

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