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Atom Motors (AM) plans to issue bonds to raise $145 million. AMs investment banker will charge flotation costs equal to 7.2 percent of the total
Atom Motors (AM) plans to issue bonds to raise $145 million. AMs investment banker will charge flotation costs equal to 7.2 percent of the total amount issued. The market value of each bond at issue time will be $1,000. How many bonds must AM sell to net $145 million after flotation costs? Assume that fractions of bonds cannot be issued. Show how much of the total amount issued will consist of flotation costs and how much AM will receive after flotation costs are paid. (LO 3-3)
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