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    Calculating the expected capital from a new bond issue

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    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)

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    YTM=r=7.45%/2=3.725% semi annually
    Number of periods=n=20*2=40 half ...

    Solution Summary

    Solution depicts the steps to estimate the expected capital raised from issuing bonds in the given case.