Based on the current market rate, what will one of the new bonds sell for? Submit Answer format: Currency: Round to: 2 decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter2: The Domestic And International Financial Marketplace
Section: Chapter Questions
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LBJ Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 23.00 year maturities with a
coupon rate of 7.06% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond).
The current market rate for similar bonds is 8.64% APR. The company hopes to raise $34.00 million with the new issue.
Based on the current market rate, what will one of the new bonds sell for?
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Answer format: Currency: Round to: 2 decimal places.
Transcribed Image Text:LBJ Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 23.00 year maturities with a coupon rate of 7.06% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond). The current market rate for similar bonds is 8.64% APR. The company hopes to raise $34.00 million with the new issue. Based on the current market rate, what will one of the new bonds sell for? Submit Answer format: Currency: Round to: 2 decimal places.
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