Your firm will issue 10-year bonds to raise $10 million. You will either (a) issue regular...

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

I got 12244060, I want to see if this correct. Thank you

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HAVE GIVEN ANSWERS IN 2 WAYS : ONE WITHOUT ROUNDING : IMAGE 1, ONE WITH ROUNDING : IMAGE 2

BASICALLY THIS IS A SUM WHICH COMPARES ZERO COUPON VS COUPON BOND IN TERMS OF INFLOWS AND OUTFLOWS. I HAVE DONE SO MAY TIMES, AND IN SUM IT IS ALWAYS MENTIONED TO CARRY VALUE TO 2 DECIMALS, WITH NO INTERMEDIATE ROUNDING.

jeff jeffy answered 16 hours ago

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Your firm will issue 10-year bonds to raise $10 million. You will either (a) issue regular...

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