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
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 16P
Related questions
Question
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05fc3997-28fc-415b-92a3-153e6a2d54f0%2F6e0df52a-0d76-4f43-b63e-4e00d08edbf5%2Fkxdi8ac_processed.png&w=3840&q=75)
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
![](/static/compass_v2/shared-icons/check-mark.png)
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
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)