Question

Whipple Corp. just issued 260,000 bonds with a coupon rate of 5.90 percent paid semiannually that mature in 25 years. The bonds have a YTM of 6.34 percent and have a par value of $2,000. How much money was raised from the sale of the bonds

Answer 1

Whipple Corp. has raised a total of $520,000,000 from the bond issuance, calculated by multiplying the number of bonds (260,000) by their par value ($2,000).

Step-by-step explanation:

The Whipple Corp. bond issuance aims to raise capital by selling bonds to investors. Given the par value of $2,000 and the issuance of 260,000 bonds, the total amount raised is calculated by multiplying these two figures. Despite the yield to maturity (YTM) being mentioned, it is not necessary for calculating the total funds raised, as the price at which bonds are sold is typically at par value when they are first issued.

The calculation thus is:

• Number of bonds issued: 260,000
• Par value per bond: $2,000
• Total funds raised: 260,000 x $2,000 = $520,000,000

The amount of money raised by Whipple Corp. from this bond issuance is $520,000,000.