Steubenville Liquidators wants to raise $6.2 million to expand their business. To accomplish this, they plan to sell 20-year, $1,000 face value, zero-coupon bonds. The bonds will be priced to yield 9.5%. What is the minimum number of bonds they must sell to raise the $6.2 million they need (Use values in dollar)?

Question

Quizplus · Accepted Answer

To find the minimum number of bonds, calculate the present value of one bond using the formula: PV = FV / (1 + r)^n, where FV = $1,000, r = 9.5% or 0.095, and n = 20. Then, divide $6.2 million by the present value of one bond to find the number of bonds needed. The correct calculation results in approximately 38,078 bonds.

Steubenville Liquidators Wants to Raise $6