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Suppose your company needs to raise $36 million and you want to issue 25-year bonds for this purpose Assume the required return on your bond
Suppose your company needs to raise $36 million and you want to issue 25-year bonds for this purpose Assume the required return on your bond issue will be 7 percent, and you're evaluating two issue alternatives: A semiannual coupon bond with a 7 percent coupon rate and a zero coupon bond. Your company's tax rate is 30 percent. Assume a par value of $1,000. a-1. How many of the coupon bonds would you need to issue to raise the $36 million? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Number of coupon bonds a-2. How many of the zeroes would you need to issue? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Number of zero coupon bonds b-1. In 25 years, what will your company's repayment be if you issue the coupon bonds? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Coupon bonds repayment b-2. What if you issue the zeroes? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Zeroes repayment c. Calculate the firm's aftertax cash outflows for the first year for each bond. (Enter your answers as positive values in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answers to the nearest whole number, e.g., 32.) Outflow Coupon bonds Zero coupon bonds Inflow
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