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A2M wants to reduce its weighted average cost of capital by replacing some of its equity with long-term debt. Assume that A2M would like to
A2M wants to reduce its weighted average cost of capital by replacing some of its equity with long-term debt. Assume that A2M would like to raise $200 million with a new issuing of bonds. Assume that the issue will have a coupon rate of 3% with a 5 year maturity. Assume this are semi-annual coupon bonds and each have a face value of $1.000 and the required rates of return for similar bonds in the market is 4%. What would be the issuing price of these bonds? How many bonds does the company have to sell to achieve its target?
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