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Suppose your company needs to raise 100 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond
Suppose your company needs to raise 100 million and you want to issue 30-year bonds for this purpose. Assume the required return on your bond issue will be 5%, and you're evaluating two issue alternatives: a 5% annual coupon and a zero coupon bond. Your company's tax rate is 35 percent. In 30 years, what will your company's repayment be if you issue the coupon bond? What if you issue the zero? (Assume annual compounding on the zero coupon bond). $100,000,000, $231, 380,000 $105,000,000, $231, 3S0,000 $100,000,000, $115, 505,000 $105,000,000, $432, 195,000 $100,000,000, $612, 438,000
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