Your firm will issue 10-year bonds to raise $10 million. You will either (a) issue regular coupon bonds which have a 6% coupon r

Question

3 years ago

14

Your firm will issue 10-year bonds to raise $10 million. You will either (a) issue regular coupon bonds which have a 6% coupon r

ate and make annual payments or (b) issue zero coupon bonds which make annual payments. Both options will have a YTM of 8%. What is your firm’s total repayment 10 years from now if they went with option (b)?

Business

1 answer:

kogti [31] · Answer 1 · 2022-05-03T17:25:49+03:00

kogti [31]3 years ago

5 0

Answer:

10000000*〖(1+0,08)〗^10 = 21589249

Explanation:

The formula to get the principal of a future value is this one, but if there are monthly or yearly payments we need the interest rate of those payments, as the b) option does not have coupon this is the formula.