Answer to Question #283263 in Finance for LUFFY

Question

Zoro Bhd recently issued 10-year bonds at a price of RM1,000. These bonds

pay 3% in interest each six months. Their price has remained stable since

they were issued. Due to additional financing needs, the firm wishes to issue

new bonds that would have a maturity of 10 years, a par value of RM1,000,

and pay RM40 in interest every six months. If both bonds have the same

yield, how many new bonds must Zoro Bhd issue to raise RM2,000,000

cash?

Answer 1

Solution: