Suppose your company needs to raise $38 million and you want to issue 20-year

Suppose your company needs to raise $38 million and you want to issue 20-year bonds for this purpose. Assume the required return on your bond
issue will be 8 percent and you%u2019re evaluating two issue alternatives: A 8 percent semiannual coupon bond and a zero coupon bond. Your
company%u2019s tax rate is 40 percent.

In 20 years what will your company%u2019s repayment be if you issue the coupon bonds? (Enter your answer in
dollars not millions of dollars i.e. 1234567.)

What if you issue the zeroes? (Enter your answer in dollars not millions of dollars i.e.
1234567.)

Calculate the aftertax cash flows for the first year for each bond. (Enter your answer in dollars not millions
of dollars i.e. 1234567.)
(Click to select) Inflow Outflow (Click to select) Inflow Outflow
rev: 10_19_2012