How many oid bonds must the firm issue

Reference no: EM131947184

Question: 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 7.40%, 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. Your answer should be between 3150 and 4850, with no special characters.

Reference no: EM131947184

Questions Cloud

Calculate and provide the numerical eoq : For this assessment, suppose that you are the operations manager for ABC Manufacturing, a small manufacturing company founded three years ago.

What is value of each bond at the given moment : Bond A is a 12-year 7% annual coupon bond. Bond B is a 12-year 9% annual coupon bond. Bond C is a 12-year 11% annual coupon bond.

List the effects to your organization : Your sales team gains a new market in Johanesburg, South Africa and wants to present a contract to the client selling under EXW, Allentown, Pa.

Does her response encourage ethical conduct : Is it unethical or illegal for a sales rep to represent that he is a doctor when he has a doctorate degree in chemistry but is not actually a physician?

How many oid bonds must the firm issue : 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

What criteria or qualifications to use to support the office : Here is the scenario: I'm a chief HR Officer at my organization. As the Chief officer, my primary role is to be the workforce strategist.

Develop a distribution plan for getting these new products : The product development team at Chocoberry has the responsibility of drafting a business plan for the option of marketing chocolate products.

Higher the number of periods and lower the future value : The higher the number of periods, the lower the future value. Annuities due is the payments are made/received at the beginning of the period.

What is the maximum allowable housing ratio : What is the maximum allowable housing ratio for a conforming loan? What is the maximum allowable debt-to-income ratio for a conforming loan?

User Account

All Pages