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Business, 04.10.2020 16:01 hlhunter11p8f0o0

Suppose your company needs to raise $40.5 million and you want to issue 25-year bonds for this purpose. Assume the required return on your bond issue will be 5.5 percent, and you’re evaluating two issue alternatives: a 5.5 percent semiannual coupon bond and a zero coupon bond. Your company’s tax rate is 25 percent. a.
How many of the coupon bonds would you need to issue to raise the $40.5 million? How many of the zeroes would you need to issue?

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Suppose your company needs to raise $40.5 million and you want to issue 25-year bonds for this purpo...
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