WTCC Corp. needs to raise 24,000,000 dollars by issuing bonds. Yields on government paper are as follows: YTM on Government Paper 3.1% Very short Other details for WTCC debt are: Face Value Years Until Maturity Coupon Rate B Between 1,000 and 2,000 C Between 2,000 and 3,000 D Between 3,000 and 5,000 40,000 4.2% The CFO likes the Long maturity. It appears that a spread of 3.3% is required by potential bondholders. 17 8.0% Short 7.2% Intermediate Please compute the price potential investors would pay for a bond. How many bonds would WTCC have to sell (issue) to raise 24,000,000dollars? (Hint: round up: for instance, 500.000001 bonds rounds up to 501 bonds.) A Between 500 and 1,000 8.5% Long
WTCC Corp. needs to raise 24,000,000 dollars by issuing bonds. Yields on government paper are as follows: YTM on Government Paper 3.1% Very short Other details for WTCC debt are: Face Value Years Until Maturity Coupon Rate B Between 1,000 and 2,000 C Between 2,000 and 3,000 D Between 3,000 and 5,000 40,000 4.2% The CFO likes the Long maturity. It appears that a spread of 3.3% is required by potential bondholders. 17 8.0% Short 7.2% Intermediate Please compute the price potential investors would pay for a bond. How many bonds would WTCC have to sell (issue) to raise 24,000,000dollars? (Hint: round up: for instance, 500.000001 bonds rounds up to 501 bonds.) A Between 500 and 1,000 8.5% Long
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
Transcribed Image Text:WTCC Corp. needs to raise 24,000,000 dollars by issuing bonds.
Yields on government paper are as follows:
YTM on
Government
Paper
3.1%
Very short
Other details for WTCC debt are:
Face Value
Years Until Maturity
Coupon Rate
B Between 1,000 and 2,000
C Between 2,000 and 3,000
D Between 3,000 and 5,000
40,000
4.2%
The CFO likes the Long maturity.
It appears that a spread of 3.3% is required by potential bondholders.
17
8.0%
Short
7.2%
Intermediate
Please compute the price potential investors would pay for a bond.
How many bonds would WTCC have to sell (issue) to raise 24,000,000dollars?
(Hint: round up: for instance, 500.000001 bonds rounds up to 501 bonds.)
A Between 500 and 1,000
8.5%
Long
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 1 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education