Reinegar Corporation is planning two new issues of 25-year bonds. Bond Par will be sold at its
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Reinegar Corporation is planning two new issues of 25-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon. Bond OID will be an Original Issue Discount bond, and it will also have a 25-year maturity and a $1,000 par value, but its semiannual coupon will be only 6.25%. If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Reinegar issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.
a. | 4,337 | |
b. | 4,562 | |
c. | 4,676 | |
d. | 4,228 | |
e. | 4,448 |
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