Question
Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of
Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of
6.7%
(annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:
| Rating | AAA | AA | A | BBB | BB |
| YTM | 6.81% | 7.01% | 7.11% | 7.51% | 8.01% |
Assuming that Luther's bonds receive a AA rating, the number of bonds that Luther must issue to raise the needed $25 million is closest to:
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Management and Cost Accounting
Authors: Colin Drury
8th edition
978-1408041802, 1408041804, 978-1408048566, 1408048566, 978-1408093887
