Question
19 years ago, Blue Lake Corp. issued 30 year to maturity zero-coupon bonds with a par value of $5,000. The current interest rate on this
19 years ago, Blue Lake Corp. issued 30 year to maturity zero-coupon bonds with a par value of $5,000. The current interest rate on this type of bond is 13.55 percent, compounded annually. What is the current price of the bond?
Use the information below to determine before-tax cost of debt financing of bond S.
The selling price of the bond (P) Number of years to maturity (N) Annual Coupon rate (paid annually) Par Value Floatation costs Before-tax cost of debt Financing
Bond S $1,050 29 6.55% $1,000 $2.39 (%) ?
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Foundations Of Financial Management
Authors: Stanley B. Block, Geoffrey A. Hirt, Bartley R. Danielsen
13th Edition
0073382388, 978-0073382388
