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Selling bonds. Rawlings needs to raise $43,900,000 for its new manufacturing plant in Jamaica. Berkman Investment Bank will sell the bond for a commission of
Selling bonds. Rawlings needs to raise $43,900,000 for its new manufacturing plant in Jamaica. Berkman Investment Bank will sell the bond for a commission of 2.8%. The market yield is currently 7.8% on twenty-year zero-coupon bonds. If Rawlings wants to issue a zero-coupon bond, how many bonds will it need to sell to raise the $43,900,000? Assume that the bond is semiannual and issued at a par value of $1,000. How many bonds will Rawlings need to sell to raise the $43,900,000? (Round to the nearest whole number.) Firm commitment versus best efforts. Astro Investment Bank offers Lunar Vacations the following options on its initial public sale of equity: (a) a best efforts arrangement whereby Astro will keep 2.5% of the retail sales or (b) a firm commitment arrangement of $10,100,000. Lunar plans on offering 1,000,000 shares at $12.53 per share to the public. If it sells 100% of the shares, which is the better choice for Lunar Vacations? Which is the better choice for Astro Investment Bank? . Under the best efforts arrangement, what are the proceeds for Lunar Vacations? $(Round to the nearest dollar.)
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