If both bonds have the similar yield how many new bonds

Reference no: EM13459963

JRJ Corporation recently issued 10-year bonds at a price of $1,000. These bonds pay $60 in interest each six months. Their price has remained stable since they were issued, i.e., they still sell for $1,000. Due to additional financing needs, the firm wishes to issue new bonds that would have maturity of 10 years, a par value of $1,000, and pay $40 in interest every six months. If both bonds have the same yield, how many new bonds must JRJ issue to raise $2,000,000 cash?

a. 2,400

b. 2,596

c. 3,000

d. 5,000

e. 4,275

Reference no: EM13459963

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