Question
Another option for financing is to call in the outstanding bonds you have issued and obtain a loan with more favorable terms than the bonds
Another option for financing is to call in the outstanding bonds you have issued and obtain a loan with more favorable terms than the bonds you would issue. Presently, the company has a 6% coupon bond that matures in 11 years. The bond pays interest semiannually.
What is the market price of a $1,000 face value bond if the current rate of interest is 12.9%?
How much will it cost the company to call in 1,000 of these bonds?
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Introduction To Finance Markets, Investments, And Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
17th Edition
1119561175, 978-1119561170
