Question

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, and is currently trading at $940. What is the YTM on this bond? Enter answer in percents, accurate to 2 decimal places

Answer #1

Q1)

Number of bonds needed to issue:

= $12,000,000/$943.57

**= 12,717.66 bonds or 12,718 bonds**

Q1/Scite Inc., is trying to determine its cost of debt. The firm
has a debt issue outstanding with 2 years to maturity that is
quoted at 108.6 percent of face value. The issue makes annual
payments and has a coupon rate of 8.7 percent annually. What is the
firm's pretax cost of debt? (Enter answer in percents.)
Q2/Borkshire Castaway has preferred stock outstanding that is
currently selling for $52.05 a share and pays a dividend of $3.4
per share. The...

Gugenheim, Inc. offers a 7 percent coupon bond with annual
payments. The yield to maturity is 8.3 percent and the maturity
date is 7 years. What is the market price of a $1,000 face value
bond?
A $1000 face value bond has two years left to maturity, 5.6%
coupon rate with annual coupons, and is currently trading at $915.
What is the YTM on this bond?

The Juice Co. wants to raise a million dollars by selling some
coupon bonds at par. Comparable bonds in the market have a 6
percent semi-annual coupon, 8 years to maturity, and are selling at
96.9 percent of par. What coupon rate should the Juice Co. set on
their bonds?
Select one:
a. 3.25 percent
b. 6.50 percent
c. 6.00 percent
d. 4.85 percent

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.

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...

The Dairy Delight wants to raise $1.5 million by selling some
coupon bonds at par. Comparable bonds in the market have a 4
percent annual coupon, 10 years to maturity, and are selling at 95
percent of par. What coupon rate should The Dairy Delight set on
its bonds?

A company wants to raise $600,000 by issuing zero coupon bonds.
The bonds have a face value of $1,000 and will mature in 8 years.
The issue price gives potential investors a yield to maturity of 3%
p.a. (nominal). Assume comparable-risk coupon bonds normally pay
semi-annual coupons
Calculate the issue price per bond. (Round your answer to 2
decimal places. Do not include the $ symbol. Do not use comma
separators. E.g. 1234.56)
Answer
How many bonds should the...

a
company wants to raise 30 million dollars to build a new
headquarter. It will fund this by issuing a 10-year bond with a
face value of $1,000 and a coupon rate of 6.3% paid semiannually.
the table below shows the yield to maturity for similar 10-year
corporate bonds of different ratings. Which of the following is
closest to how many more bonds the company would have to sell to
raise this money if their bonds received a BBB rating...

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 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.

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