Profit Margin, Investment Turnover, and ROI Briggs Company has operating income of $56,496, invested assets of $214,000, and sal
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Answer:
It will issue 34,407 bonds
Explanation:
The Original Issue Discount state that the interest are accrued during the life of the bond and included in the face value.
This means in 25 years, it will receive 1,000 dollars, how much will it pay for that now ?
we have to find the present value which makes the YTM equal to 10%
where m are the times it compound per year
in this case a semiannualy rate is compounding 2 times per year
the rate will be 0,10 percent
the face value will be 1,000
and time equal to 25 years
If it needs to raise 3,000,000 It will issue:
3,000,000/87.20 = 34406.669 = 34,407 OID bonds