1. Dan Ervin was recently hired by East Coast Yachts to assist the company with its short term financial planning and to evaluate the companys performance. Dan graduated from college five years ago with a finance degree, and he has been employed in the treasury department of Fortune company since then. The company structured as an LLC. The company has manufactured custom mid size, high performance yachts for clients over this period, and its products have high reviews for safety and reliability. After the financial planning conducted by Dan Ervin, company have decided to expand the companys operations so in the process of funding accumulation a 5 year bond is been issued with 10 % coupon rate and BD 4000 face value with annual coupon payment and has yield to maturity of 8 %.

Required:

a. Calculate the price of the bond(7 marks)

b. Draw a time line for coupon payment (3 marks)

c. East Coast Yatch company is a kind of Risk Averse in nature do you think bond issue is the best choice for the company explain by its advantages and disadvantages in detail (5 marks)