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 7.0% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings
YTM AAA=6.7%
If Luther's bonds receive a AAA rating, what will the price of the bonds be? And, what is the number of bonds that Luther must issue to raise the needed $25 million?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart
14th Edition
1264101597, 9781264101597
