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DryEden manufactures water - saving products for home in anticipation of widespread water shortages. The company is planning to expand its operations by building a
DryEden manufactures watersaving products for home in anticipation of widespread water shortages. The company is planning to expand its operations by building a new facility in Arizona, which will be financed by issuing $ Million in Year bonds. The bond will pay interest at a rate that approximates the return investors will require for new DryEden bonds. The bonds will pay interest twice per year. DryEden and its Investment bank have agreed that the marekt will probably demand about a return at this time and have set the bond's coupon rate at to make it look attractive to investors. AT the time of issuance, however, the market actually demands a return of from this company. Show calculations for the bonds' issue price given this information.
DryEden manufactures watersaving products for home in anticipation of widespread water shortages. The company is planning to expand its operations by building a new facility in Arizona, which will be financed by issuing $ Million in Year bonds. The bond will pay interest at a rate that approximates the return investors will require for new DryEden bonds. The bonds will pay interest twice per year. DryEden and its Investment bank have agreed that the marekt will probably demand about a return at this time and have set the bond's coupon rate at to make it look attractive to investors. AT the time of issuance, however, the market actually demands a return of from this company. Show calculations for the bonds' issue price given this information.
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