Suppose your company needs to raise $50 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and youre evaluating two issue alternatives: A semiannual coupon bond with a coupon rate of 8 percent and a zero coupon bond. Your companys tax rate is 40 percent. Both bonds will have a par value of $1,000.

How many of the coupon bonds would you need to issue to raise the $50 Million? Number of coupon bonds ____________

How many of zereos would you need to issue? Number of zero coupon bonds_____________

In 20 Years, what will your company's repayment be if you issue the coupon bonds? Coupon bonds repayment________________

What if you issue the zeros? Zeroes repayment________________

Calculate the aftertax cash flows for the first year for each bond? Coupon bonds___________ Zero coupon bonds_______________