Question
B12. (Net advantage of refunding) IBM has $150 million of 10% sinking-fund debentures out- standing. The issue amortizes in equal annual amounts at the ends
B12. (Net advantage of refunding) IBM has $150 million of 10% sinking-fund debentures out- standing. The issue amortizes in equal annual amounts at the ends of years 10, 11, and 12. The firm can call the bonds at 103%. Its new issue rate is 8% for 10-year debt, 8.5% for 11-year debt, and 9% for 12-year debt. Its marginal income tax rate is 40%. Which sinking-fund amounts should the firm call?
PLEASE ANSWER THE FOLLOWING QUESTIONS
Problem B12: For this problem from your course text, please choose an answer from the following for year 10.
| a. | -$3,821,231; don't refund | |
| b. | -$3,315,871; don't refund | |
| c. | -$2,852,949; don't refund | |
| d. | -$2,249,153; don't refund | |
| e. | -$1,724,413; don't refund | |
| f. | -$574,931; don't refund | |
| g. | $574,931; refund | |
| h. | $1,724,413; refund | |
| i. | $2,249,153; refund | |
| j. | $2,852,949; refund | |
| k. | $3,315,871; refund | |
| l. | $3,821,231; refund |
Problem B12: For this problem from your course text, please choose an answer from the following for year 11:
| a. | -$3,821,231; dont refund | |
| b. | -$3,315,871; dont refund | |
| c. | -$2,852,949; dont refund | |
| d. | -$2,249,153; dont refund | |
| e. | -$1,724,413; dont refund | |
| f. | -$574,931; dont refund | |
| g. | $574,931; refund | |
| h. | $1,724,413; refund | |
| i. | $2,249,153; refund | |
| j. | $2,852,949; refund | |
| k. | $3,315,871; refund | |
| l. | $3,821,231; refund |
Problem B12: For this problem from your course text, please choose an answer from the following for year 12.
| a. | -$3,821,231; dont refund | |
| b. | -$3,315,871; dont refund | |
| c. | -$2,852,949; dont refund | |
| d. | -$2,249,153; dont refund | |
| e. | -$1,724,413; dont refund | |
| f. | -$574,931; dont refund | |
| g. | $574,931; refund | |
| h. | $1,724,413; refund | |
| i. | $2,249,153; refund | |
| j. | $2,852,949; refund | |
| k. | $3,315,871; refund | |
| l. | $3,821,231; refund |
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Offshore Finance And State Power
Authors: Andrea Binder
1st Edition
0192870122, 978-0192870124
