Question

# Whipple Corp. just issued 300,000 bonds with a coupon rate of 6.14 percent paid semiannually that...

Whipple Corp. just issued 300,000 bonds with a coupon rate of 6.14 percent paid semiannually that mature in 25 years. The bonds have a YTM of 6.58 percent and have a par value of \$2,000. How much money was raised from the sale of the bonds? (Round your intermediate calculations to two decimal places and final answer to the nearest whole dollar amount.)

The question is solved with the help of a financial calculator

Number of bonds= 300,000

Future value= \$2,000

Time= 25 years*2= 50 semi-annual periods

Yield to maturity= 6.58%/2= 3.29%

Coupon payment = 6.14%/2= 3.07% 0.0307*2,000= \$61.40

The present value of the bonds is calculated by entering the below in a financial calculator:

FV= 2,000; N= 50; I/Y= 3.29; PMT= 61.40

Press CPT and PV to calculate the present value of the bonds

The present value of the bonds is \$1,892.77.

Money raised from the sale of the bonds= \$1,892.77*300,000 = \$567,831,000.