Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. blackstone energy is planning to issue two types o

Blackstone Energy is planning to issue two types of 25-year, non-callable bonds to raise a...

90.2K

Verified Solution

Question

Finance

image
Blackstone Energy is planning to issue two types of 25-year, non-callable bonds to raise a total of $6 million. First, 3,000 bonds with a 10% annual coupon rate will be sold at their $1,000 par value to raise $3 million. Second, original issue discount (OID) bonds, also with a 25-year maturity and a $1,000 par value, will be sold, but these bonds will have a nominal coupon of only 7.75%, also with annual payments. The OID bonds must be offered at a discount (i.e., below par) in order to provide investors with the same yield as the par bonds. How many OID bonds must the firm issue to raise the other $3 million? You may round your answer up or down to a whole number of bonds. Hint: Calculate the price of OID bonds (given the nominal coupon rate and yield of 10%), and divide that price into the $3 million Your answer should be between 3150 and 4850, with no special characters

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Statistics
1.2K views

Education influences attitude and lifestyle. Differences in education are a big factor in the \"generation gap.\"...

Psychology
1.2K views

For each discussion you should fully answer each question with no less than 6-8 sentences per...

Biology
1.2K views

Write 2 paragraphs answering the following questions What is an intersex condition How should parents...

Geometry
1.2K views

CO 8 y 3 7 6 5 4 2 Show Transcribed Text 3 X 2...

Basic Math
1.2K views

Find the product z z2 and the quotient Express your answers in polar form Z2...

Statistics
1.2K views

Here is a sample set of quantitative data 215 8 222 2 228 7 250...

Accounting
1.2K views

ABC Hardware Store had the following transactions during the year starting January 1, 2020. At...

Accounting
1.2K views

A Corporation reports an account receivable for financial reporting purposes but not for tax purposes...

Accounting
1.2K views

Sheridan, Inc., has 9400 shares of 3%, $100 par value, noncumulative preferred stock and 37600...

Accounting
1.2K views

Total Cost Method of Product Pricing Smart Stream Inc. uses the total cost method of...

Accounting
1.2K views

John Anderson established JOHNManufacturing Co., a company engaged in producing specialized machinery components, and has...

Accounting
1.2K views

5 Question 12 You deposit $500 today in a savings account that pays 6% interest,...