ith a face value of $15 mil e maturity of the issue is fi nterest to be paid on the be pnually equals $12.375 the

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Solsberry has sold a twenty-year serial bond
issue with a face value of $15 million. The
average maturity of the issue is fifteen years.
Total interest to be paid on the bonds, payable
semi-annually, equals S12,375 thousand. What
is the net interest cost (NIC) of the issue?
A. 4.125%
B. 5.5%
C. The NIC cannot be computed from the data
provided here.
D. 8.25%
Transcribed Image Text:Solsberry has sold a twenty-year serial bond issue with a face value of $15 million. The average maturity of the issue is fifteen years. Total interest to be paid on the bonds, payable semi-annually, equals S12,375 thousand. What is the net interest cost (NIC) of the issue? A. 4.125% B. 5.5% C. The NIC cannot be computed from the data provided here. D. 8.25%
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