Cost of debt with fees Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10 4% with semiannual payments, and will use an investment bank that charges $20 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices? a. $980.40 b. $994 65 c. $1,066.78 d. $1,176 66

Cost of debt with fees Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 10 4% with semiannual payments, and will use an investment bank that charges $20 per bond for its services. What is the cost of debt for Kenny Enterprises at the following market prices? a. $980.40 b. $994 65 c. $1,066.78 d. $1,176 66

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 9P: Bond Yield and After-Tax Cost of Debt A companys 6% coupon rate, semiannual payment, 1,000 par value...

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DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. 1. A company plans to issue a 25-year bond with a 12.5% interest rate, issued at a face value of P1, 000. The company is subject a 30% tax rate and expects a return on investment at 8%. Compute for the cost of debt issuance.