Narstek Inc. has decided to issue a 4-year maturity, 15% coupon bonds with a total nominal...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Narstek Inc. has decided to issue a 4-year maturity, 15% coupon bonds with a total nominal value of 300 million . The bonds were sold at a 10% discount and floatation costs amounted to 5% of the total nominal value. The principal will be repaid in equal installments after the first year in which there will be no payment. The tax rate is 22%. Compute the cost of this bond issue. Try 18% first. Narstek Inc. has decided to issue a 4-year maturity, 15% coupon bonds with a total nominal value of 300 million . The bonds were sold at a 10% discount and floatation costs amounted to 5% of the total nominal value. The principal will be repaid in equal installments after the first year in which there will be no payment. The tax rate is 22%. Compute the cost of this bond issue. Try 18% first.
Expert Answer:
Answer rating: 100% (QA)
To calculate the cost of the bond issue we need to find the total amount of cash outflows ie cost that Narstek Inc will incur The cost will be calcula... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The oil hedges that will ensure the price of a barrel of oil exports in 2015 cost 773 million dollars, a price much higher than the 543 million MXN pesos paid for this year, and will be supplemented...
-
The following nominal default-free bonds are traded in a well functioning capital market today: (step by step work, no excel) Bond Type face value coupon maturity price A Zero Coupon Bond 100 ------...
-
Caine Bottling Corporation is considering the purchase of a new bottling machine. The machine would cost $200,000 and has an estimated useful life of 8 years with zero salvage value . Management...
-
A drug for the relief of asthma can be purchased from 5 different, manufacturers in liquid, tablet, or capsule form, all of which come in regular and extra strength. How many different ways can a...
-
If a pattern is used to model an overly broad portion of a system, the generality of resulting pattern is sacrificed. Explain with the help of an example.
-
Go to KPMG.com, and select an industry that you're interested in. Choose a topic within the industry related to data analytics and/or artificial intelligence and write about how KPMG is using the...
-
Jenco Incorporateds only product is a combination fertilizer-weed killer called Fertikil. Fertikil is sold nationwide through normal marketing channels to retail nurseries and garden stores. Taylor...
-
In case of a spill, which action should you take?
-
Many processor architectures have a load with post-increment instIt is not possible to implement this instruction without either modifying the register file (adding another write port) or making the...
-
Daoud's Date Farm and Dubai Date Shop enter into the following agreement: "Between 1 January 2023 and 31 December 2023, Dubai Date Shop will buy all of the dates it needs from Daoud's Date Farm. In...
-
A supersonic aircraft with a wingspan of 9.5 m is flying over the north magnetic pole (in a magnetic field of magnitude 55.9 T perpendicular to the ground) at a speed of 1.93 times the speed of sound...
-
answer the following questions. n-5 n is 1. We have a function f: Z Z defined as f(n) = {n+3 if n is odd. Find whether the function is injective and surjective. What would be the inverse of this...
-
You have a two stock portfolio with $1,000 in atook A and 97,005 in stock Bi You believe the following probability diatellation exists for your atooke SEASE OF Probabiilsy of State Market Rate Hartat...
-
(5) (5) (5) (5) The lubrication of bearings is a problem in fluid mechanics. The oil or lubricant between the bearing and the slider is a viscous fluid and most bearings operate in the laminar range...
-
Is Test Marketing trying to sell your product or service to a limited number of customers and carefully measuring factors like customer feedback and how long takes to make a sale ?
-
Hmu: Let ???? : ???? 3 ???? 4 be a lineor trowformotion, ???? ( ???? 1 , ???? 2 , ???? 3 ) = ( 2 ???? 1 - ???? 2 , ???? 1 + ???? 3 , ???? 2 - ???? 1 , ???? 2 + ???? 3 ) Find ker ( ???? ) and Roge ( L...
-
Choose two matrices A and B with dimension 2 x 2. Calculate det A, det B, and det (AB). Repeat this process until you are able to discover how these three determinants are related. Summarize your...
-
Presented next is information pertaining to Ward Specialty Foods, a calendar-year sole proprietorship, maintaining its books on the cash basis during the year. At year-end, however, Mary Ward's...
-
Refer to the financial statements and related notes of The Coca-Cola Company in Appendix A of this book. Required 1. What was the total income tax expense relating to income before income taxes for...
-
Using the present value tables, solve the following problems: Required 1. What is the present value on January 1, 2007 of $30,000 due on January 1, 2012 and discounted at 12% compounded annually? 2....
-
The six top-earning states in 2019 by median household income are listed. 1. Maryland 2. New Jersey 3. Hawaii 4. Massachusetts 5. Connecticut 6. Alaska
-
The ages of the Supreme Court justices as of April 7, 2021 In Exercises 25 and 26, find the range, mean, variance, and standard deviation of the population data set. 66 56 72 49 82 71 66 60 53
-
Using the information from Exercise E5.1 prepare a statement of cash flows for Candyfloss for the first six months of the year 2010, using the indirect method. data Exercise E5.1 Candice-Marie James...
Study smarter with the SolutionInn App