Assuming that Luther's bonds receive a AAA rating, the number of bonds that Luther must issue to raise the needed $25 million is closest to ________
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 7.3% (annual payments). The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:
Rating AAA AA A BBB BB
YTM 6.55% 6.75% 6.85% 7.25% 7.75%
A) 28,469
B) 33,213
C) 23,724
D) 18,979
Answer: C
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