Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon rate of 7.5% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: Assuming that Luther's bonds are rated AAA, their price will be closest to ________.

Question

Luther Industries needs to raise $25 million to fund a new office complex. The company plans on issuing ten-year bonds with a face value of $1,000 and a coupon rate of 7.5% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:  Assuming that Luther's bonds are rated AAA, their price will be closest to ________.

Quizplus · Accepted Answer

A) FV = $1,000
PMT = $75
N = 10
I = 6.60
Compute PV = $1064.40.

Luther Industries Needs to Raise $25 Million to Fund a New