A 3% semi-annual coupon U.S. Treasury bond (FV is $1000) with 15 years to maturity is priced at $970.00.

(a) What is the yield to maturity for the Treasury bond? (express answer a percentage to 2 decimal places) ___?___

Now assume that Kits Industries, an AA rated firm is trying to issue 15 year bonds to finance a $12 million project. These bonds are to pay 5% semi-annual coupons and have a face value of $1000. AA rated bonds of similar maturity have a credit spread of 1.90% over treasuries.

(b) At what price do you estimate Kits Industries to be able to issue these bonds for? (calculate your answer as a percentage to 2 decimal places) ___?____

(c) How many bonds does Kits need to issue to reach its financing goal? (round to the nearest whole number) ____?____