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Lets assume that Texas Espresso issues a bond on 31.12.X with the following characteristics: Par value = $10,000,000 N = 5 years Coupon rate =

Lets assume that Texas Espresso issues a bond on 31.12.X with the following characteristics:

Par value = $10,000,000

N = 5 years

Coupon rate = 4%

a) What is the market rate (yield-to-maturity) if the proceeds of the issuance is $9,000,000? (Hint: use the Excel solver)

b) Assuming that the market rate is equal to the coupon rate, what is the proceed of the issuance?

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