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Caspian Sea Drinks needs to raise $46.00 million by issuing bonds. It plans to issue a...

Caspian Sea Drinks needs to raise $46.00 million by issuing bonds. It plans to issue a 13.00 year semi-annual pay bond that has a coupon rate of 5.04%. The yield to maturity on the bond is expected to be 4.77%. How many bonds must Caspian Sea issue?

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Answer #1

Value of Bond =

Where r is the discounting rate of a compounding period i.e. 4.77%/2 = 2.358%  

And n is the no of Compounding periods 13 years * 2 = 26 periods  

Coupon 5.04%/2 = 2.52%

=

= 489.6576558286 + 545.54856886

= $ 1035.20622468

No of Bonds to issue = 46,000,000 / 1035.20622468

= 44,435.43 OR 44436 Bonds

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

1- (1+r)* Coupon * - MaturityValue (1 + r)"

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