"ABC" Corporation is planning 2 new issues of 25-year bonds, as described below:

Bond "A", that will be sold at its $1,000 par value, and it will have a 10% coupon rate, payable on a semiannual basis.
Bond "B", that will also have a 25-year maturity and a $1,000 par value, but its coupon will be only 6.25%, payable on a semiannual basis.
Based on the above-given information, how many bonds of the bond "B" must "ABC" Corporation issue to raise $28,000,000?
Note: Round your final answer up to a whole number of bonds.

Respuesta :

Answer: 42,572

Step-by-step explanation:

market rate = coupon rate = 10%

Interest = 1000 * 6.25% = 62.5/2 = 31.25

SP= 31.25 *18.2559255 + 1000* 0.0872037

SP = 657.7

28,000,000 / 657.7 = 42,572 bonds