Reinegar Corporation Is Planning Two New Issues of 25-Year Bonds

question 9

Multiple Choice

Reinegar Corporation is planning two new issues of 25-year bonds.Bond Par will be sold at its $1,000 par value, and it will have a 10% semiannual coupon.Bond OID will be an Original Issue Discount bond, and it will also have a 25-year maturity and a $1,000 par value, but its semiannual coupon will be only 6.25%.If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Reinegar issue to raise $3,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.

• A) 4,228
• B) 4,337
• C) 4,448
• D) 4,562
• E) 4,676

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Definitions:

Chemical Tampering

The act of intentionally altering or adding substances to products or substances, which can compromise safety, quality, or effectiveness.

Uniquely Treated Paper

Paper that has undergone special processing or treatment to give it distinct characteristics or functions.

Paid in Full

A term indicating that a bill or a debt has been completely paid off and no amount remains due.

Full Balance

This term could refer to the complete settling of a financial account, leaving no outstanding balance.