Luther Industries Needs to Raise $25 Million to Fund a New

question 87

Multiple Choice

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 6.0% (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 AA rating, the price of the bonds will be closest to ________.

• A) $1129
• B) $941
• C) $1318
• D) $753