Question
Moon Software Inc. is planning to issue a 10-year, noncallable bonds to raise a total of $3 million. The bond is with a 10-year maturity
Moon Software Inc. is planning to issue a 10-year, noncallable bonds to raise a total of $3 million. The bond is with a 10-year maturity and a $1000 par value. The bond has a coupon rate of 6.25% and is compounded annually.
In addition, following information is collected:
1) A share of 5 year 4.25% coupon Treasury note is sold at $1028.58.
2) A share of 10 year 4.25% coupon Treasury note is sold at $1022.1.
3) Moon software Inc. has an outstanding 5-year noncallable bond, with a coupon rate of 10%, compounded semi-annually. The bond is valued at par.
Q: How many 10-year bonds must the firm issue to raise $3,00,000? Assume Moon's default risk remains unchanged, and round your final answer up to a whole number of bonds.
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