A $100 bond has a 7% annual coupon and is redeemable at par at the end of ten years. In addition to the purchase price of $100 per bond, there is a flat $100 service fee to be paid by the purchaser at the time of purchase, regardless of the number of bonds purchased.

Smith wishes to purchase a number of these bonds to secure an effective annual yield of at least 5% on the sum of the purchase price of $100 per bond plus the $100 service fee. What is the minimum number of bonds that Smith must purchase.

Possible Answers:

4,5,6,7 or 8