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6 - 2 0 . The Dinosaur Adventure Theme Park needs $ 2 0 0 million to build a monorail that will run through the
The Dinosaur Adventure Theme Park needs $ million to build a monorail that will run through the park. The park's financial advisors believe that it will be able to borrow the money by issuing a year bond with an annual coupon rate of percent that pays interest every months. However, interest rates have been very volatile over the last year, ranging from percent to percent for borrowers with Dinosaur's credit rating. As a result, Dinosaur's manager is concerned. If rates rise while the offering is in registration, Dinosaur will not get the $ million it needs from the sale of its bonds. To make sure they will be able to raise enough money, Dinosaurs financial advisors have recommended that Dinosaur register a total of $ million worth of bonds. In the event that rates rise above percent, Dinosaur will sell enough additional bonds to get the $ million it needs for the monorail system.
If rates rise to percent on the day the bonds are sold, how much would Dinosaur receive from the sale of $ million worth of bonds?
What is the par value of the additional bonds that Dinosaur must sell to raise the required $ million?
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