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babymother [125]
3 years ago
10

A firm issues $225 million in straight bonds at an original issue discount of 2.0% and a coupon rate of 6%. The firm pays fees o

f 4% on the face value of the bonds. The net amount of funds that the debt issue will provide for the firm is
Business
1 answer:
Greeley [361]3 years ago
8 0

Answer:

$211.5 million  

Explanation:

The computation of the net amount of funds that the debt issue is as follows

<u> Particulars                        Amount </u>

Face value of Bonds        $225,000,000.00

Less Discount (225m × 0.02) -$4,500,000.00

Less fees (225m × 0.04)       -$9,000,000.00

Net amount of funds           $211,500,000.00

Hence, the net amount of funds that the debt issue is $211.5 million

The same is to be considered

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Explanation:

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3 0
3 years ago
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2 years ago
A company pays a constant 6.5 dividend on stock. The dividend will maintain for the next 12 years and cease forever. The require
zalisa [80]

Answer:

$46.31

Explanation:

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Using this formula

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Let plug in the formula

Current share price=6.5*[1-(1+0.091)^-12]/0.091

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6 0
3 years ago
holdup bank has an issue of prefered stock witha standard deviation of $7 that just sold for $87 per share. What is the banks co
alisha [4.7K]

Answer: 8.05%

Explanation:

From the question, we are informed that Holdup bank has an issue of prefered stock witha stated dividend of $7 that just sold for $87 per share.

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