Question
ABC CORP IS TRYING TO RAISE $28 MILLION AND I WILL ISSUE 20 YEAR BONDS. THE RATE OF RETURN WILL BE 8%. I AM CONSIDERING
ABC CORP IS TRYING TO RAISE $28 MILLION AND I WILL ISSUE 20 YEAR BONDS. THE RATE OF RETURN WILL BE 8%. I AM CONSIDERING TWO OPTIONS
8% ANNUAL COUPON AND A ZERO COUPON BOND. ABC CORP'S TAX RATE IS 25%. IN 20 YEARS WHAT WILL BE THE REPAYMENT IF YOU ISSUE THE COUPON BONDS? WHAT IF YOU ISSUE THE ZERO BONDS? (ASSUME ANNUAL COMPOUNDING ON THE ZERO COUPON BOND)
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
15th edition
1337671002, 978-1337395250
