After Dans analysis for East Coast Yachts Larissa has decided to expand the companys operations. She has asked Dan to enlist an underwriter to help sell $50 million (total value of all bonds) in new 20-year (maturity of each bond) bonds to finance new construction.

Dan has entered into discussions with Kim McKenzie, an underwriter from the firm of Crowe & Mallard, about which bond features East Coast Yachts should consider and also what coupon rate the issue will likely have. After examining all features of each type of bonds, Dan is considering to issue coupon bearing bonds or zero coupon bonds. The YTM on either bond issue will be 7.5 percent. The coupon bond would have a 7.5 percent coupon rate. Face of value bond is $1,000

Show all work please.

1. How many of the coupon bearing bonds must East Coast Yachts issue to raise the 50 million? How many zero coupon bonds?

2. In 20 years, what will the principal repayment be if East Coast Yachts issues the coupon bearing bonds? What about zero bonds?