Question
Determining Bond Prices, Interest Rates, and Financial Statement Effects Deere & Companys 2015 10-K reports the following footnote relating to long-term debt for its equipment
Determining Bond Prices, Interest Rates, and Financial Statement Effects Deere & Companys 2015 10-K reports the following footnote relating to long-term debt for its equipment operations subsidiary. Deeres borrowings include $300 million, 7.125% notes, due in 2031 (bolded below). Long-term borrowings at October 31 consisted of the following in millions of dollars:
Notes and Debentures | 2015 | 2014 |
---|---|---|
4.375% notes due 2019 | $750 | $750 |
8-1/2% debentures due 2022 | 105 | 105 |
2.60% notes due 2022 | 1,000 | 1,000 |
6.55% debentures due 2028 | 200 | 200 |
5.375% notes due 2029 | 500 | 500 |
8.10% debentures due 2030 | 250 | 250 |
7.125% notes due 2031 | 300 | 300 |
3.90% notes due 2042 | 1,250 | 1,250 |
Other notes | 106 | 288 |
Total | $4,461 | $4,643 |
A recent price quote (from Yahoo! Finance Bond Center) on Deere's 7.125% notes follows.
Type | Issuer | Price | Coupon (%) | Maturity | YTM (%) | Current Yield (%) | Fitch Rating | Callable |
---|---|---|---|---|---|---|---|---|
Corp | Deere & CO | 142.72 | 7.125 | 2031 | 3.623 | 4.992 | A | No |
This price quote indicates that Deere's 7.125% notes have a market price of 142.72 (142.72% of face value), resulting in a yield to maturity of 3.623%.
How much cash would Deere have to pay to repurchase the 7.125% notes at the quoted market price of 142.72? (Assume no interest is owed when Deere repurchases the notes.)
Round your answer to two decimal places. $____ million
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