Question

The Xylon Firm wants to raise $18 million to expand its business. To accomplish this, the...

The Xylon Firm wants to raise $18 million to expand its business. To accomplish this, the firm plans to sell 10-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 5 percent. What is the minimum number of bonds the firm must sell to raise the $18 million it needs? Use annual compounding.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Number of bonds = Total amount needed / Selling price of a bond
= $       18,000,000 / $     613.91
= 29,320
Working:
A zero coupon bond does not pay coupon.So, Price of zero coupon bond is the present value of face value of bond.
Price of one bond =-pv(rate,nper,pmt,fv) Where,
$ 613.91 rate = 5%
nper = 10
pmt = 0
fv = $       1,000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The MerryWeather Firm wants to raise $25 million to expand its business. To accomplish this, the...
The MerryWeather Firm wants to raise $25 million to expand its business. To accomplish this, the firm plans to sell 20-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $25 million it needs? Use annual compounding.
The MerryWeather Firm wants to raise $17 million to expand its business. To accomplish this, the...
The MerryWeather Firm wants to raise $17 million to expand its business. To accomplish this, the firm plans to sell 16-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 8 percent. What is the minimum number of bonds the firm must sell to raise the money it needs? Use annual compounding.
The MerryWeather Firm wants to raise $13 million to expand its business. To accomplish this, the...
The MerryWeather Firm wants to raise $13 million to expand its business. To accomplish this, the firm plans to sell 20-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $13 million it needs? Use annual compounding. A.31,328 B.50,306 C.25,153 D.62,656 E.13,000
Colmo Corporation wants to raise $8.0 million to expand its business. To accomplish this, it plans...
Colmo Corporation wants to raise $8.0 million to expand its business. To accomplish this, it plans to sell 15-year, $1,000 face value, zero-coupon bonds. The bonds will be priced to yield 7.0 percent, with semiannual compounding. What is the minimum number of bonds the firm must sell to raise the $8.0 million it needs? 21,907 25,236 20,703 22,454 20,328
14 Happy Corporation needs to raise $2.8 million for expansion. The firm wants to raise this...
14 Happy Corporation needs to raise $2.8 million for expansion. The firm wants to raise this money by selling 20-year, zero-coupon bonds with a par value of $1,000. The market yield on similar bonds is 6.49 percent. How many bonds must the company sell to raise the money it needs? Assume semiannual compounding. Group of answer choices A. 2,800 bonds B. 9,450 bonds C. 11,508 bonds D. 10,315 bonds E. 10,044 bonds
Q1/ LibreOffice, Inc. wants to raise $12 million dollars in debt financing. It wants to offer...
Q1/ LibreOffice, Inc. wants to raise $12 million dollars in debt financing. It wants to offer a $1,000 face value, 8.5 percent coupon bond with annual payments and 12 years to maturity. The yield to maturity on similar bonds out in the marketplace is 9.3 percent. How many bonds must the firm issue in order to raise the desired amount of funding? Q2/ A $1000 face value bond has two years left to maturity, 5.4% coupon rate with annual coupons,...
Suppose a firm wants to raise $12.7 million by issuing bonds. It plans to issue a...
Suppose a firm wants to raise $12.7 million by issuing bonds. It plans to issue a bond with the following characteristics: Coupon rate: 6% APR Yield to maturity: 7.6% APR Coupons paid out semi-annually Matures 20 years away from today Face Value = $1,000    How many bonds does the firm need to issue? Round to 2nd decimal point.
1) One year ago, ShopFast issued 15-year annual bonds at par. The bonds had a coupon...
1) One year ago, ShopFast issued 15-year annual bonds at par. The bonds had a coupon rate of 6.5 percent and had a face value of $1,000. Today, the applicable yield to maturity to ShopFast’s bonds is 7%. What was the change in price in ShopFast’s bonds from last year to today? A) -55.56t B) 51.94 C) -$43.73 D) 58.71 E) The bond price did not change. 2) WallStores needs to raise $2.8 million for expansion. The firm wants to...
1. A Treasury note has 9 years till maturity is quoted at 96:17 with a 4.25%...
1. A Treasury note has 9 years till maturity is quoted at 96:17 with a 4.25% coupon. The bond pays interest semiannually. What is the yield to maturity on the bond? 2. Radio Shack needs to raise $4.75 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 15 years. The market yield on similar bonds is 6.85 percent. How many bonds must The...
Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a...
Kintel, Inc., management wants to raise $1 million by issuing six-year zero coupon bonds with a face value of $1,000. The company’s investment banker states that investors would use an 10.32 percent discount rate to value such bonds. Assume semiannual coupon payments. At what price would these bonds sell in the marketplace? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and Bond price to 2 decimal places, e.g. 15.25) Market rate $ How many bonds would the firm have...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT