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Your company wants to raise ​$10 million by issuing 15​-year ​zero-coupon bonds. If the yield to...

Your company wants to raise ​$10 million by issuing 15​-year ​zero-coupon bonds. If the yield to maturity on the bonds will be 5% ​(annual compounded APR​), what total face value amount of bonds must you​ issue? The total face value amount of bonds that you must issue is ​$ nothing. ​(Round to the nearest​ cent.)

Solutions

Expert Solution

Price of the bonds = Face value of bond / (1 + Annual rate)^N

Price of bond = 10000000

Annual rate = 5%

N = 15

10000000 = Face value/(1+5%)^15

Face value = 10000000* 2.078928

= 20789281.79

jeff jeffy answered 3 years ago
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