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Rug Rats Co. needs $1.4 million to expand its business. To accomplish this, the firm plans...

Rug Rats Co. needs $1.4 million to expand its business. To accomplish this, the firm plans to sell 30-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 7.15 percent with interest compounded semiannually. What is the minimum number of bonds the company must sell? Ignore all issue costs.

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Answer #1

Price of the bonds is calculated using the PV function as follows:

=PV(7.15%/2,30*2,0,1000)

=121.54

The number of bonds to sell:

=1400000/121.54

=11519.26

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