Thomasville Liquidators wants to raise $6.2 million to expand their business. To

Question

Thomasville Liquidators wants to raise $6.2 million to expand their business. To accomplish this they plan to sell 20-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield 9.5%. What is the minimum number of bonds they must issue to raise the $6.2 million?

Thomasville Liquidators wants to raise $6.2 million to expand their business. To accomplish this they plan to sell 20-year, $1,000 face value, zero coupon bonds. The bonds will be priced to yield 9.5%. What is the minimum number of bonds they must issue to raise the $6.2 million?

Explanation / Answer

Price of bond= 1000/1.095^20= $162.82

minimum number of bonds they must issue to raise the $6.2 million= 6.2m/162.82= 38078 bonds

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