Question
Assume Deere & Company's 2016 10-K reports the following footnote relating to long-term debt. Deere's borrowings include $200 million, 6.55% debentures (unsecured bonds), due in
Assume Deere & Company's 2016 10-K reports the following footnote relating to long-term debt. Deere's borrowings include $200 million, 6.55% debentures (unsecured bonds), due in 2028 (highlighted below). Long-term borrowings at October 31 consisted of the following in millions of dollars:
Notes and debentures | 2016 | 2015 |
---|---|---|
Medium-term notes: | ||
Average interest rate of 9.2%-2015 | $20 | |
Swapped $170 to Euro at average variable interest rates of 3.1%-2015 | 250 | |
7.85% debentures due 2020 | $500 | 500 |
6.95% notes due 2021: ($700 principal) | ||
Swapped to variable interest rates of 5.2% - 2016, 3.1% - 2015 | 744 | 786 |
8.95% debentures due 2021 | 200 | 200 |
8-1/2% debentures due 2022 | 200 | 200 |
6.55% debentures due 2028 | 200 | 200 |
8.10% debentures due 2030 | 250 | 250 |
7.125% notes due 2031 | 300 | 300 |
Other notes | 29 | 22 |
Total | $2,423 | $2,728 |
A recent price quote on Deere's 6.55% debentures indicates that Deere's bonds have a market price of 108.104 (108.104% of face value), resulting in a yield to maturity of 5.89%. How much cash would Deere have to pay to repurchase the 6.55% debentures at the quoted market price of 108.104? (Assume no interest is owed when Deere repurchases the debentures.)
Select one:
A. $200.000 million
B. $213.100 million
C. $211.780 million
D. $216.208 million
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