Question
The City of Metropolis has a major infrastructure project to undertake in the next year. The projects estimated cost is $27,000,000 and it should be
The City of Metropolis has a major infrastructure project to undertake in the next year. The projects estimated cost is $27,000,000 and it should be paid to the contractor in the beginning of the project. For that reason, local government of Metropolis decided to issue two bonds: A zero-coupon bond with the face value of $1000 and a 12% coupon bond (paid annually) with the face value of $1,000. Both types of bonds have four years to maturity and the yield to maturity is 10.60% for both bonds. If the City of Metropolis decides to issue 29,900 zero-coupon bonds, how many coupon bonds should they issue to cover the financing of the infrastructure project?
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