What is the minimum number of bonds Northern Warehouses must sell to raise the $12 million it needs?

Northern Warehouses must sell at least 12,000 bonds to reach the 12 million dollars it needs. Calculate this using Bond Price = Facing Value/(1+yield).n, where n represents the number of year until maturity. Plugging our values in, we get Bond Price = 1000/(1+.06%)35 = 14,76.

Northern Warehouses, therefore, would have to sell 12,000. ($14.76 x 12,00=177.120.) bonds to get the $12,000,000 needed to expand. This is because each bond’s face value is $1000, and it has a yield rate of 6.6%. Note that the figure above does not include any costs related to issuing bonds like underwriting fees, etc. but they should still be included when calculating your total funding requirement.