Q1: DailyChange Ltd has outstanding 15,000 coupon bonds. These bonds pay 7.25% semi-annual coupon bonds and has 15 years to maturity. Upon maturity (at the end of 15 years), what is the total final cash payment that the company will have to pay the bondholders?

chose 1 option

a. $15,000,000

b. $16,087,500

c. $15,543,750

d. $15,725,000

e. $15,725,500

Q2: Suppose the company you work for, NewChallenge Ltd, needs to raise $25 million and the company plans to issue 30-year bonds for this purpose. Assume the required return on the bond issue will be 8.25%, and you have been asked to evaluate two issue alternatives: an 8.25% semi-annual coupon bond and a zero-coupon semi-annual bond. Your companys tax rate is 33%. How many of the coupon bonds would you need to issue to raise the $25 million? How many of the zeroes would you need to issue?

chose 1 option

a. 25,000 coupon bonds; 482,645 zero coupon bonds.

b. 25,000 coupon bonds; 282,645 zero coupon bonds.

c. 25,000 coupon bonds; 123,093 zero coupon bonds.

d. 15,000 coupon bonds; 282,645 zero coupon bonds.

e. 28,000 coupon bonds; 282,645 zero coupon bonds.