FINANCING EAST COAST YACHTS'S EXPANSION PLANS WITH A BOND ISSUE After Dan's EFN analysis for East Coast Yachts (see the Mini Case in Chapter 3) decided to expand the company's operations. She has asked Dan to enlist an u help sell S50 million i n new 20-year bonds to finance new construction. Dan has entered into ons with Kim McKenzie, an underwriter from the firm of Crowe&Mallard, about features East Coast Yachts should consider and also what coupon rate the issue ely have. Although Dan is aware of bond features, he is uncertain as to the costs and benefits of some of them, so he isn't clear on how each feature would affect the coupon rate will lik of the bond issue. I. You are Kim's assistant, and she has asked you to prepare a memo to Dan describing the effect of each of the following bond features on the coupon rate of the bond. She would also like you to list any advantages or disadvantages of each feature. a. The security of the bond, that is, whether or not the bond has collateral. b. The seniority of the bond. c. The presence of a sinking fund