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Dewe, Cheatum and Howe is going to issue 25,000,10 year bonds with a par value of $1,000 each. The coupon rate will be 7.25% paid
Dewe, Cheatum and Howe is going to issue 25,000,10 year bonds with a par value of $1,000 each. The coupon rate will be 7.25% paid semi-annually. The market price per bond at issue is $950 dollars and the cost to issue the bonds is $50 per bond. The tax rate is 20% a) (1.5 point) How much money will Dewe, Cheatum and Howe raise b) (1.5 point) How much will Dewe Cheatum and Howe pay the investment banker c) (3 points) What is pre-tax yield to the investor d) (3 points) What is the pre-tax cost of debt to Dewe, Cheatum and Howe e) (1 point) What is the after-tax cost of debt to Dewe, Cheatum and Howe
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