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Mike just retired and wants to use bonds to provide regular retirement income. You narrow...

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Finance

Mike just retired and wants to use bonds to provide regular retirement income. You narrow his search to two different bonds. Both bonds have a 30-year maturity and have high credit ratings. Bond C pays a coupon payment of $12 each month and has a yield-to-maturity of 7%. Bond D pays no coupon payments and has a yield to maturity of 9%.

N I/Y PV PMT FV
360 0.58333% 1,926.90 12 1000
360 0.75000% 67.89 0 1000

Mike has $2,500,000 saved for retirement. How many bonds would he need to buy if he invested all his retirement in Bond C? How many bonds would he need to buy to invest all his retirement in Bond D?

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