Question

whipple corp. just issued 310,000 bonds with a coupon rate of 6.20 percent paid semiannually that mature in 15 years. The bonds have a YTM of 6.64 percent and have a par valueof 2000. how money was raised from the sale of the bonds?

Answer 1

Answer:

$594,338,200 was raised from the sale of the bonds.

Explanation:

The Price of the bond (PV) can be determined using a financial calculator as follows :

Pmt   = ($2,000 × 6.20 %) / 2 = $62

P/yr   = 2

n        = 15 × 2 = 30

YTM  = 6.64 %

FV     =  $2,000

PV     = ?

Therefore, PV = $1,917.22

Money raised = 310,000 bonds × $1,917.22

                       = $594,338,200