You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.7 million face value of 10-year debt. You have the following data for each:

• A public issue: The interest rate on the debt would be 8.85%, and the debt would be issued at face value. The underwriting spread would be 1.57%, and other expenses would be $87,000.
• A private placement: The interest rate on the private placement would be 9.7%, but the total issuing expenses would be only $37,000.

  a-1. Calculate the net proceeds from public issue.

  a-2. Calculate the net proceeds from private placement.

  b-1. Calculate the PV of the extra interest on the private placement