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A company has decided to sell $50 million in new 20-year bonds to finance new construction...

A company has decided to sell $50 million in new 20-year bonds to finance new construction projects. The company is also considering whether to issue coupon bearing bonds or zero coupon bonds both with the same face value of $1,000. The YTM on either bond issue will be 7.5%. The coupon bond would have a 7.5% coupon rate and the bond makes semiannual payments. (1) How many of the coupon bonds must the company issue to raise the $50 million? How many of the zeroes must it issue? (2) In 20 years, what will be the principal repayment due if the company issues the coupon bonds? What if it issues the zeroes?

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

jeff jeffy answered 1 year ago
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