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Suppose your company needs to raise $35.5 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond issue will be

8.0 percent and you%u2019re evaluating two issue alternatives: a 8.0 percent annual coupon bond and a zero coupon bond. Your company%u2019s tax rate is 35

percent.

How many of the coupon bonds would you need to issue to raise the $35.5 million? (Enter

rounded answer as directed but do not use the rounded numbers in intermediate calculations.Enter the whole

number for your answer not millions (e.g. 1234567).)

How many of the zeroes would you need to issue? (Enter rounded answer as directed but do

not use the rounded numbers in intermediate calculations. Enter the whole number for your answer not millions

(e.g. 1234567). Round your answer to 2 decimal places (e.g. 32.16).)

In 20 years what will your company%u2019s repayment be if you issue the coupon bonds? (Do not include the dollar sign

($). Enter rounded answer as directed but do not use the rounded numbers in intermediate

calculations. Enter your answer in dollars not millions of dollars (e.g. 1234567).)

What if you issue the zeroes? (Do not include the dollar sign ($).Enter rounded answer as directed but do not use the rounded numbers in intermediate calculations. Enter

your answer in dollars not millions of dollars (e.g. 1234567). Round your answer to the nearest whole dollar amount (e.g. 32).)

Assume that the IRS amortization rules apply for the zero coupon bonds.

Calculate the firm%u2019s aftertax cash outflows for the first year under the two different scenarios. (Do not include the

dollar signs ($). Enter rounded answers as directed but do not use the rounded numbers in intermediate

calculations. Input a cash outflow as a negative value and a cash inflow as a positive value. Enter your answers

in dollars not millions of dollars (e.g. 1234567). Round your answers to 2 decimal places (e.g. 32.16).)

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