You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $$10\mathrm{.}4$ 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 $8\mathrm{.}7\%,$ and the debt would be issued at face value. The underwriting spread would be $1\mathrm{.}54\%,$ and other expenses would be $$84,000.$

A private placement: The interest rate on the private placement would be $9\mathrm{.}4\%,$ but the total issuing expenses would be only $$34,000.$

Required:

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.

b$-2.$ Other things being equal, which is the better deal?