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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 5.8% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: Rating YTM AAA A BBB BB 6.68% 6.88% 6.98% 7.38% 7.88% Assuming that Luther's bonds receive a AAA rating, the price of the bonds will be closest to: O A. $937 OB. $1,125 OC. $750 OD. $1,312
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