Provide investors with the same yield as the par bonds

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Reference no: EM131612079

Blackstone Energy is planning to issue two types of 25 year non callable bonds to raise a total of $6 million. First 3,000 bonds with a 10% annual coupon rate will be sold at their $1,000 par value to raise $3 million. Second, original issue discount (OID) bonds, also with a 25 year maturity and a $1,000 par value, will be sold, but these bonds will have a nominal coupon of only 7.30%, also with annual payments. The OID bonds must be offered at a discount in order to provide investors with the same yield as the par bonds. How many OID bonds must the firm issue to raise the other $3,000? You may round your answer up or down to a whole number of bonds.

Reference no: EM131612079

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