(Calculating the cost of debt) Acura Autoparts supplies automobile parts for large automobile manufacturers in the United...

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(Calculating the cost of debt) Acura Autoparts supplies automobile parts for large automobile manufacturers in the United States and Europe. They are planning to build a new factory in China to save on operating costs. However, they plan to raise the required funds in the United States by issuing seven-year maturity bonds. Their investment banker suggests that they can expect to have a spread to treasury of around 90 basis points on these bonds. Refer to Figure 14.3 and explain how this reflects the credit rating of Acura Autoparts.

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Financial Management Principles And Applications

ISBN: 9781292222189

13th Global Edition

Authors: Sheridan Titman, Arthur Keown, John Martin

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