Question
Miller Mining part 3 Miller Mining has $30 million in land value and $15 in mortgage bonds issued on the property. These bonds were originally
Miller Mining part 3 Miller Mining has $30 million in land value and $15 in mortgage bonds issued on the property. These bonds were originally issued at par ($1000), but are now selling today (April, 2010) based on a 7.75%, compounded semi-annually, market rate of return. The bonds have a stated interest rate of 8% and mature on January 1, 2020. The bonds pay interest semi-annually on July 1 and January 1 each year. Suppose that an investor buys a $1,000 face value bond on April 1, 2010. Given that the indenture does not limit the amount of additional bonds that can be issued, the company issues an additional $10 million in mortgage bonds against the property. If Miller is forced to liquidate its property for $20 million, and the company has no other assets, how much will the original bondholders receive? (Do not include the dollar sign($) in your response. Enter your answer in the following format: XX,XXX,XXX)
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