1. Suppose your company needs to raise $30 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 8 percent, and you're evaluating two issue alternatives: an 8 percent semiannual coupon bond and a zero coupon bond. Your company's tax rate is 35 percent.
a. How many of the coupon bonds would you need to issue to raise the $30 million? How many of the zeroes would you need to issue?