ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. What is the company's cost of the capital raised through the sale of these bonds?

ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. What is the company's cost of the capital raised through the sale of these bonds?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. What is the company's cost of the capital raised through the sale of these bonds?
1. ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760.What is the company's cost of the capital raised through the sale of these bonds? 2. ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. Is the bond a good buy for an investor who expects a 9% return on his investments?
ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. Is the bond a good buy for an investor who expects a 9% return on his investments? Show manual complete solution with formulas.
1. ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. What is the company's cost of the capital raised through the sale of these bonds? 2. ABC Corporation has decided to sell ₱1000 bonds which will pay semiannual dividends of ₱20 (2% per period) and will mature in 5 years. The bonds are sold at ₱830, but after brokers' fees and other expenses the company ends up receiving ₱760. Is the bond a good buy for an investor who expects a 9% return on his investments?3. A student deposits ₱1,000 in a savings account that pays interest at the rate of 6% per year compounded annually. If all the money is allowed to accumulate, how much money will the student have after 12 years? 4. A certain sum of money will be deposited in a savings account that pays interest at the rate of 6% per year compounded annually.…
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