Fashion Trends PH is seeking to borrow money to finance the development of its online retailing business using private bonds. These pay no interest during their life but a larger sum on maturity than was originally borrowed. It is offering investors a return of 100,000 after 15 years for every 40,000 loaned. An appropriate risk-adjusted interest rate is 6 percent. Is this a good deal for investors? Explain your answer

Fashion Trends PH is seeking to borrow money to finance the development of its online retailing business using private bonds. These pay no interest during their life but a larger sum on maturity than was originally borrowed. It is offering investors a return of 100,000 after 15 years for every 40,000 loaned. An appropriate risk-adjusted interest rate is 6 percent. Is this a good deal for investors? Explain your answer

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter1: Introduction To Finance For Entrepreneurs

Section: Chapter Questions

Problem 4EP

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