Apple is about to issue its second green bond. Lisa Jackson must be prepared to address questions that might arise related to the unique nature of that bond. Be prepared to discuss the following questions in class:

$1.$ In regard to potential allegations of greenwashing, what specific questions might Jackson anticipate?

How might she respond?

$2.$ What is your best estimate of the yield to maturity the new bond might exhibit, assuming it was a conventional bond, not a green bond? As the case makes clear, you need to account for yield curve and credit quality effects. You can approach this problem in at least two ways:

a$.$ Use the outstanding Apple bonds. Be prepared to justify this approach. Note that you can find the time to maturity by subtracting the maturity date from the case date. A graph of yield curve for Apple's bonds can be created from case data and contrasted with the yield curve on US government $($risk$-$free$)$ bonds.

b$.$ Use the data on bonds of companies similar to Apple. Be prepared to justify this approach.

$3.$ What is your best estimate of the greenium the new bond will carry? Calculate this greenium as an adjustment to the yield you estimated in question $2($not as an adjustment to price$).$ Provide an estimate of a reasonable high and low greenium.

$4.$ By how much has Apple increased its use of debt financing? Is it at risk of having its credit rating adjusted downward? Two common ratios used to describe debt levels are EBIT$-$to$-$interest expense and debt$-$to$-$EBITDA. EBIT is earnings before interest and taxes and is listed as operating income in Apple's income statement. EBITDA is earnings before interest, taxes, depreciation, and amortization.

To find EBITDA, add depreciation and amortization $($separately identified in the provided income statement$)$ to EBIT. Note that other long$-$term liabilities would not be considered debt and that interest is only the interest paid $($ignore interest income and dividend income$).$ Debt in this analysis is book value.