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Abbot Corporation is a real estate developer looking to build a new property in the Metro Vancouver area. In order to do so , they
Abbot Corporation is a real estate developer looking to build a new property in the Metro Vancouver area. In order to do so they need to raise capital to finance the construction. The company has investigated two alternatives:
Issue $ million year bonds, with an coupon per annum. The company can buy them back on the open market at the end of years; analysts estimate that it would cost $ to reacquire the $ million dollar issue. The market rate is
Issue $ million of preferred shares at par. The shares can be redeemed at the companys option at the end of years for a price estimated to be in the region of $ Annual cumulative dividends are set at
Required:
Provide journal entries to record issuance, annual dividends, or interest for one year only of both the shares and debt. If no entry is required for a transactionevent select No journal entry required" in the first account field. Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.
Assume Abbots tax rate is What is the aftertax annual cost of the various alternatives?
This part of the question is not part of your Connect assignment.
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