How much is the principal repayment at maturity

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Singapore Airlines Limited (the "Company") was incorporated on January, 28, 1972 and is listed on the Singapore Stock Exchange Market with ISIN code SG1V61937297. The Company has more than 20 subsidiaries that provide a wide range of airline related services, for example, cargo and engine overhaul. The company owns a 49 percent stake in Virgin Atlantic and a 32.8 percent stake in Tiger Airways. The company is a full member of the global Star Alliance and its airline service network can reach more than 160 destinations in 50 countries. The company reported $800 million on the Consolidated Statement of Cash Flows for the financial year ended March, 31, 2011 for the proceeds from issuance of bonds.
Assume the Board of Directors (BOD) has decided to expand the Company's operations by issuing a $30 million, 15-year bond to finance the operation. The BOD is considering whether to issue coupon bearing bonds or zero coupon bonds with yield to maturity of 7 percent for both bonds. The coupon bond would have a 7 percent coupon rate. Taxation at statutory corporate tax rate is 17 percent.

Questions
1. In order to raise $30 million, how many of the coupon bearing and zero coupon bonds will be issued?
2. How much is the principal repayment at maturity for coupon and zero coupon bonds?
3. What are the considerations that the BOD should consider in issuing coupon bonds?

Reference no: EM13535926

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