Use the Information for the Question(s)below

question 14

Multiple Choice

Use the information for the question(s) below.
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 $1000 and a coupon rate of 7.0% (annual payments) .The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:
-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:

• A)24,655.
• B)25,000.
• C)24,477.
• D)26,681.

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Definitions:

Straight-Line Depreciation

A technique for distributing the expense of a physical asset evenly across its lifespan in yearly increments.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, reducing its book value on the balance sheet.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health and operational efficiency.