Lopez Information Systems is planning to issue 10-year bonds. The going market rate for such bonds is 7.53 percent. Assume that coupon payments will be semiannual. The company is trying to decide...

Lopez Information Systems is planning to issue 10-year bonds. The going market rate for such
bonds is 7.53 percent. Assume that coupon payments will be semiannual. The company is trying
to decide between issuing an 8 percent coupon bond or a zero coupon bond. The company needs
to raise $1 million.
(All intermittent calculations should be rounded to 4 decimal places before carrying to next
calculation.)(*) (Round the bonds value to 2 decimal places.)(**) (Round the number of shares up
to the nearest whole number.)
A. The price of the 8 percent coupon bonds would be $ 1,032.61
B. Lopez would need to sell coupon bonds to raise $1 million. 968 bonds
C. The price of the zero coupon bonds would be $ 477.51
D. Lopez would need to sell zero coupon bonds to raise $1 million. 2094 bonds
Solution:
A.
The price of bonds is the sum of the present values of all future coupons and the maturity value,
discounted by the yield or...