Question $20$

Blackstone Energy is planning to issue two types of $25-$year, non$-$callable bonds to raise a total of $$6$ million. First, $3,000$ bonds with a $10\%$ annual coupon

rate will be sold at their $$1,000$ par value to raise $$3$ million. Second, original issue discount $($OID$)$ bonds, also with a $25-$year maturity and a $$1,000$ par

value, will be sold, but these bonds will have a nominal coupon of only $7\mathrm{.}40\%,$ also with annual payments. The OID bonds must be offered at a discount $($i$.$e$.,$

below par$)$ in order to provide investors with the same yield as the par bonds. How many OID bonds must the firm issue to raise the other $$3$ million? You

may round your answer up or down to a whole number of bonds.

Hint: Calculate the price of OID bonds $($given the nominal coupon rate and yield of $10\%),$ and divide that price into the $$3$ million.

Your answer should be between $3150$ and $4850,$ with no special characters.