Exactly five years ago, AAA Corporation issued 20-year bonds with a $1,000 face value. These bonds...

 

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Exactly five years ago, AAA Corporation issued 20-year bonds with a $1,000 face value. These bonds pay $80 in coupon payment every six months. The bonds currently sell for $1,150. Due to additional financing needs, the firm has decided to issue new bonds that will have a maturity of 20 years, a par value of $1,000, and pay $70 in interest every six months. If both bonds have the same yield (market interest rate), how many new bonds must AAA issue to raise $5,000,000 cash? Exactly five years ago, AAA Corporation issued 20-year bonds with a $1,000 face value. These bonds pay $80 in coupon payment every six months. The bonds currently sell for $1,150. Due to additional financing needs, the firm has decided to issue new bonds that will have a maturity of 20 years, a par value of $1,000, and pay $70 in interest every six months. If both bonds have the same yield (market interest rate), how many new bonds must AAA issue to raise $5,000,000 cash?

Answer rating: 100% (QA)

To determine the number of new bonds AAA Corporation must issue to raise 5000000 in cash we need to ... View the full answer