PLEASE PROVIDE STEP ANSWERS FOR THE BLANKS

CBV6 online1 FDX Co. would like to raise $12 million to invest in capital expenditures. The company plans to issue five- year bonds with a face value of $1000 and a coupon rate of 2.65% (annual payments). The following table summarizes the yield to maturity for five-year (annual-pay) coupon corporate bonds of various ratings: Ratings Aa A Baa Ba B Caa Aaa 2.59% YTM 2.65% 2.78% 3.19% 4.46% 5.88% 8.55% (1) Assuming the bonds are rated "A", what will the price of the bonds be? (2) How much total principal amount of these bonds must FDX issue to raise $12 million today, assuming the bonds are "A" rated? (Because FDX cannot issue a fraction of a bond, assume that all fractions are rounded to the nearest whole number which is higher.) (3) What must the rating of the bonds be for them to sell at par? (4) Suppose that when the bonds are issued, the price of each bond is equal $975.40. What is the likely rating of the bonds? Are they junk bonds? Fill in the blanks with the relevant answers ANSWERS (1) Assuming the bonds are rated "A" the price of the bonds should be equal: USD bonds (2) Assuming the bonds are rated "A" the FDX must issue: (3) To sell the bonds at par the rating of these bonds must be: (4) If the price of each bond is $975.40 the bond rating must be: and these bonds are junk: YES / NO