Many companies look to re-finance their outstanding debt when interest rates fall significantly. Javert Toy Company has $50.00 million in debt outstanding that pays an 9.00% APR coupon. The debt has an average maturity of 10.00 years. The firm can refinance at an annual rate of 5.25%. That is, investors want 5.25% today for bonds of similar risk and maturity. How much will Javert save on interest payments with this re-finance? You can assume that Javert will issue debt to cover the full price of repurchasing the old debt from part A. (answer in terms of millions, so 1,000,000 would be 1.00) Answer Format: Currency: Round to: 4 decimal places.

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
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Many companies look to re-finance their outstanding debt when interest rates fall significantly. Javert Toy
Company has $50.00 million in debt outstanding that pays an 9.00% APR coupon. The debt has an average
maturity of 10.00 years. The firm can refinance at an annual rate of 5.25%. That is, investors want 5.25% today
for bonds of similar risk and maturity.
How much will Javert save on interest payments with this re-finance? You can assume that Javert will issue
debt to cover the full price of repurchasing the old debt from part A. (answer in terms of millions, so 1,000,000
would be 1.00)
Answer Format: Currency: Round to: 4 decimal places.
Enter Answer Here...
Transcribed Image Text:Many companies look to re-finance their outstanding debt when interest rates fall significantly. Javert Toy Company has $50.00 million in debt outstanding that pays an 9.00% APR coupon. The debt has an average maturity of 10.00 years. The firm can refinance at an annual rate of 5.25%. That is, investors want 5.25% today for bonds of similar risk and maturity. How much will Javert save on interest payments with this re-finance? You can assume that Javert will issue debt to cover the full price of repurchasing the old debt from part A. (answer in terms of millions, so 1,000,000 would be 1.00) Answer Format: Currency: Round to: 4 decimal places. Enter Answer Here...
Many companies look to re-finance their outstanding debt when interest rates fall significantly. Javert Toy
Company has $50.00 million in debt outstanding that pays an 9.00% APR coupon. The debt has an average
maturity of 10.00 years. The firm can refinance at an annual rate of 5.25%. That is, investors want 5.25% today
for bonds of similar risk and maturity.
How much will Javert Toy company pay to buy back its current outstanding bonds? (answer in terms of
millions, so 1,000,000 would be 1.00)
Answer Format: Currency: Round to: 2 decimal places.
Enter Answer Here...
Transcribed Image Text:Many companies look to re-finance their outstanding debt when interest rates fall significantly. Javert Toy Company has $50.00 million in debt outstanding that pays an 9.00% APR coupon. The debt has an average maturity of 10.00 years. The firm can refinance at an annual rate of 5.25%. That is, investors want 5.25% today for bonds of similar risk and maturity. How much will Javert Toy company pay to buy back its current outstanding bonds? (answer in terms of millions, so 1,000,000 would be 1.00) Answer Format: Currency: Round to: 2 decimal places. Enter Answer Here...
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