Question
Great Nevada Inc. has 3 bond issues outstanding: Book value of issue Coupon rate YTM Price 20,000,000 5% 4.9% 100.89 5,000,000 7% 3.7% 122.5 27,000,000
Great Nevada Inc. has 3 bond issues outstanding:
| Book value of issue | Coupon rate | YTM | Price |
|---|---|---|---|
| 20,000,000 | 5% | 4.9% | 100.89 |
| 5,000,000 | 7% | 3.7% | 122.5 |
| 27,000,000 | 6.5% | 7% | 94.7 |
1. What is the (pre-tax) cost of debt based only on the first bond?
2. What is the market value of the first bond issue?
3. What is the combined market value of all 3 issues?
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International Financial Management
Authors: Cheol Eun, Bruce Resnick
5thEdition
0073382345, 9780073382340
