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two issue alternatives: An 7 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 $17 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 20 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.

two issue alternatives: An 7 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 $17 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 20 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.

Essentials Of Investments
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
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Suppose your company needs to raise $17 million and you want to issue 20- year bonds for this purpose. Assume the required return on your bond issue will be 7 percent, and you're evaluating two issue alternatives: An 7 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 $17 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 20 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 $sian in your response.)
Transcribed Image Text:Suppose your company needs to raise $17 million and you want to issue 20- year bonds for this purpose. Assume the required return on your bond issue will be 7 percent, and you're evaluating two issue alternatives: An 7 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 $17 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 20 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 $sian in your response.)
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