Question: Lunar vacations needs to raise $6,000,000 for its new project (a golf course on the moon). Astro Investment Bank will sell the bond for a
Lunar vacations needs to raise $6,000,000 for its new project (a golf course on the moon). Astro Investment Bank will sell the bond for a commission of 2.5%. The market yield is currently 7.5% on twenty-year semiannual bonds. If Lunar wants to issue a 6.0% semiannual coupon bond, how many bonds will it need to sell to raise the $6,000,000? Assume that all bonds are issued at a par value of $1,000. How many bonds will Lunar need to sell to raise the $6,000,000?
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