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What is the gm bond principal, coupon rate and bond price

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Question - You are the CFO of Ford Motors Inc. The firm has decided to purchase new fixed assets that will allow them to more efficiently produce electric cars. To raise the funds needed to purchase these assets, you decide to issue bonds. You expect the new fixed assets to last about 20 years so you'd like to issue bonds that will be fully repaid in 20 years and a face value of $2,000. Moody's says the rate of return on similar debt is 5% per year.

a. Five years later (2027), what is the Ford bond's principal, coupon, coupon rate, and time to maturity?

b. Let's say in 2027 GM issues a new bond with a face value of $2,000 and time to maturity of 15 years. What is the GM bond's principal, coupon, coupon rate, and bond price?

c. Let's say the Ford bond in 2027 has a price of $2,000. Would a bond an investor prefer, the Ford or GM bond?

d. Would the Ford bond in 2027 have to be sold at a discount or a premium? Why?

e. Find the price of the Ford bond in 2027.

Reference no: EM133128965

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