Question

Renee’s Boutique, Inc., needs to raise $58.08 million to finance firm expansion. In discussions with its investment bank, Renee’s learns that the bankers recommend a debt issue with an offer price of $1,000 per bond and they will charge an underwriter’s spread of 4.5 percent of the gross price.

Calculate the net proceeds to Renee’s from the sale of the debt. (Enter your answer in millions of dollars and round to 2 decimal places.)

Net proceeds to Renee’s

$ m

How many bonds will Renee’s Boutique need to sell in order to receive the $58.08 million it needs? (Do not round intermediate calculations and round your final answer to the nearest whole number.)

Number of bonds

bonds

Answer 1

1)
	Net proceeds to Renee's			$       58.08	million
2)
	Number of bonds			60,817	bonds
	Working:
a.	Offer price of a bond			$ 1,000.00
	Underwriter's spread			$       45.00
	Net proceeds			$     955.00
b.	Total amounts needed			a	$       5,80,80,000
	Net procceds from a bond			b	$ 955.00
	Total number of bonds required			a/b	60,817