Question

A company wishes to raise $170 million by issuing 20-year annual coupon bonds. Each bond will have a face value of $1,000; coupon rate of 7.70 percent and yield to maturity of 6.60 percent. What is the minimum number of these bonds the company needs to sell in order to achieve its goal? A. 163,922 B. 151,753 C. 191,110 D. 144637

Answer 1

Answer:

The answer to the question is B I51,753 bonds

Explanation:

The present price of the bond and the total amount to be raised of $170m were used in arriving at the number of bonds to be issued.

n 20  

Coupon 6.60%  

YTM 7.7%*1000=77  

FV 1000  

PV ($1,120.25)  

The current price of the bond   $1,120.25  

Total amount to be raised   $170,000,000  

Number of bonds to be issued=total amount /bond price    151,752 approx...151753

Find attached spreadsheet with formulas so as to be able to follow through.

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