Things Get Messi Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 20.00 year maturities with a coupon rate of 7.25% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond). The current market rate for similar bonds is 7.96% APR. The company hopes to raise $58.00 million with the new issue. Based on the current market rate, what will a new bond sell for? Submit Answer format: Currency: Round to: 2 decimal places. Hide Hint Things Get Messi Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 20 year maturities with a coupon rate of 6.5% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond). (ROUND TO TWO DECIMAL PLACES) If the current market rate for similar bonds is 8% APR, what will a new bond sell for? SOLUTION: Coupon CPN = = USING FINANCIAL CALCULATOR: Bond Price = PV of Bond Cash Flows Po= CPN-(1-(1+)")+ +y' Face Value (1+ y)N' APR%x Face Value 6.50%x$1,000 = = $32.50 per 6 months m 2 y 8.00% y' = = 4.00% per 6 months m 2 N' = Nxm = 20x240 coupons remaining $32.50 Po = 0.04 x(1-(1.04)*0) + $1,000 (1.04)40 = $851.55