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Your firm wishes to raise 10,000,000 by either issuing regular coupon bonds or issuing zero coupon...

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Finance

Your firm wishes to raise 10,000,000 by either issuing regularcoupon bonds or issuing zero coupon bonds. The regular coupon bondswill have a 10% coupon rate. Both issues are expected to mature in12 years,pay annual, and have a yield of 6%.

a.If they opted to go with regular bonds, what is the firmstotal repayment in year 12?

b.If they opted to go with zero coupon bonds, what is the firmstotal repayment in year 12?

please explain repayment portion ^^^

Answer & Explanation Solved by verified expert
3.6 Ratings (678 Votes)
Price of the coupon bonds is calculated as below nper 12 PMT 100 Rate 6 FV 1000 Selling price 133535 pvrate nper pmtfv a1 No of coupon bonds sold 10000000    See Answer
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