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Calculate the cash pro- ceeds from the bond issuance

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Reference no: EM132815366

Problem 1: The Chief Financial Officer ("CFO") of a local listing company wants to raise fund for the company by issuing bond. It is an 8-year bond with face value of $1,000. The annual coupon rate is 10% p.a. which will be paid semi-annually. Required rate (discount rate) of investor on the bond with similar risk is 12% per annum. Assume there is no fees or costs for bond issue, calculate the cash pro- ceeds from the bond issuance. Besides, if the market price of the bond is $800, would you consider to purchase the bond? Explain.

Reference no: EM132815366

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