The MerryWeather Firm wants to raise $19 million to expand its business. To acco

Question

The MerryWeather Firm wants to raise $19 million to expand its business. To accomplish this, the firm plans to sell 20-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 4 percent. What is the minimum number of bonds the firm must sell to raise the $19 million it needs? Use annual compounding.

The MerryWeather Firm wants to raise $19 million to expand its business. To accomplish this, the firm plans to sell 20-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 4 percent. What is the minimum number of bonds the firm must sell to raise the $19 million it needs? Use annual compounding.

Explanation / Answer

19,000 *(1.04)^20= 41,631 C

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