Cosmic Communications Inc

question 89

Multiple Choice

Cosmic Communications Inc.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 Cosmic 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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