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City Kat Ltd. intends to secure $50 million for an eco-travel project by issuing 30-year bonds. These bonds have a face value of $1,000 and
City Kat Ltd. intends to secure $50 million for an eco-travel project by issuing 30-year bonds. These bonds have a face value of $1,000 and require a 5 percent rate of return. The company is currently considering two options for the bond issuance: (1) A semi-annual coupon bond with a 5 percent coupon rate, and (2) a zero-coupon bond. a) How many of the coupon bonds would City Kat Ltd. need to issue in order to raise the $50 million? b) How many of the zero-coupon bonds would City Kat Ltd. need to issue? c) What will City Kat Ltd.'s repayment amount be in 30 years if the company chooses to issue the coupon bonds? What will it be if the company chooses to issue the zero-coupon bonds
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