Answered

Connect with experts and get insightful answers to your questions on IDNLearn.com. Our platform provides detailed and accurate responses from experts, helping you navigate any topic with confidence.

Grand Energy Corporation (GE) plans to issue bonds to raise $190 million. GE's investment banker will charge 5 percent of the total amount issued to help raise the funds. The market value of each bond at issue time will be $1,000. How many bonds must GE sell to net $190 million after flotation costs? Assume that fractions of bonds cannot be issued. Round your answer to the nearest whole number.

Sagot :

Abiolataiwo2015idn

The number of bonds that GE must sell to net $190 million after flotation costs is 200,000 bonds.

Number of bonds

First step is to calculate the amount issue

Net proceeds = Amount of issue x (1 - Flotation costs)

$190,000,000 = Amount of issue x (1 - 0.05)

Amount of issue = $190,000,000/0.95

Amount of issue= $200,000,000

Second step is to calculate number of bonds

Number of bonds = $200,000,000/$1,000

Number of bonds= 200,000 bonds

Inconclusion the number of bonds that GE must sell to net $190 million after flotation costs is 200,000 bonds.

Learn more about bonds here:https://brainly.com/question/25596583

We appreciate your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. Thank you for choosing IDNLearn.com. We’re committed to providing accurate answers, so visit us again soon.