The MerryWeather Firm wants to raise $29 million to expand its business. To acco
ID: 2654773 • Letter: T
Question
The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $29 million it needs? Use annual compounding.
80,012
29,000
40,006
206,313
412,627
The MerryWeather Firm wants to raise $29 million to expand its business. To accomplish this, the firm plans to sell 15-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7 percent. What is the minimum number of bonds the firm must sell to raise the $29 million it needs? Use annual compounding.
Explanation / Answer
finance need to expand business = $ 29
term = 15years
Face value = $1000
yeild = 7%
value of bond = $1000*0.62275 = $622.75
minimum number of bonds firm must sell to raise finance = $ 29 million / $622.75 = 46567.64