XYZ Motors just issued 225,000 zero coupon bonds. These bonds mature in 20 years, have a par value of $1,000, and have a yield to maturity of 7.45 per cent. What is the approximate total amount of money the company raised from issuing these bonds? (Assume semi-annual compounding)
YTM=r=7.45%/2=3.725% semi annually
Number of periods=n=20*2=40 half ...
Solution depicts the steps to estimate the expected capital raised from issuing bonds in the given case.