Question

Global Exporters wants to raise $29.6 million to expand its business. To accomplish this, it plans to sell 20-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield 7.75 percent. What is the minimum number of bonds it must sell to raise the money it needs

Answer 1

135,436 bonds

Step-by-step explanation:

Calculation for the minimum number of bonds it must sell to raise the money it needs

First step is to calculate the Bond price

Bond price = $1,000 / [1 + (.0775 / 2)](20 × 2)

Bond price = $218.554

Second step is to calculate the Number of bonds

Number of bonds = $29,600,000 / $218.544

Number of bonds= 135,436 bonds

Therefore the minimum number of bonds it must sell to raise the money it needs will be 135,436 bonds