A company would like to raise R12 million. They would like to issue 20 000 bonds to raise this amount by issuing 12% 8 year bond . Flotation costs are R120 per bond.

1) What is the yield to maturity for this bond to make this possible

2) The company realizes that the agent they used is very expensive so they found another that has flotation costs of R100 per bond. Using the same yield of maturity computed above , calculate what the coupon rate should be in order to issue a maximum 15 000 bonds instead of 20 000 to raise the same R12 million.