Between making public offering-arranging private placement

Assignment Help Financial Management

Reference no: EM131027221

You need to choose between making a public offering and arranging a private placement. In each case the issue involves $9.3 million face value of 10-year debt. You have the following data for each: • A public issue: The interest rate on the debt would be 8.15%, and the debt would be issued at face value. The underwriting spread would be 1.67%, and other expenses would be $73,000. • A private placement: The interest rate on the private placement would be 8.3%, but the total issuing expenses would be only $23,000. a-1. Calculate the net proceeds from public issue. (Enter your answer in nearest dollars not in millions.)

a-2. Calculate the net proceeds from private placement. (Enter your answer in nearest dollars not in millions.)

b-1. Calculate the PV of extra interest on private placement. (Enter your answer in dollars not in millions. Round your answer to 2 decimal places.)

Reference no: EM131027221

Questions Cloud

What is the expected return of the second stock : Cameron has a two-asset portfolio with an expected return of 13.80%. The weight of the two stocks is 30% and 70%. The first stock has an expected return of 17%, what is the expected return of the second stock?

Why is inventory excluded from the quick ratio : Why is inventory excluded from the Quick Ratio?

What is the expected return e of the portfolio : Assume you have the following three-asset portfolio with the following characteristics: What is percentage of your portfolio is invested in Stocks A, B, and C respectively? What is the expected return E(Rp) of the portfolio?

Firm did not pay a dividend as all profits were reinvested : Rick invested in Buffalo Wild Wings (BWLD) last year when the stock was $171.36. Over the year, the firm did not pay a dividend as all profits were reinvested in the company. The current share price of BWLD is $186.74. What was Rick’s capital gain yi..

Between making public offering-arranging private placement : You need to choose between making a public offering and arranging a private placement. In each case the issue involves $9.3 million face value of 10-year debt. You have the following data for each: • A public issue: The interest rate on the debt woul..

What is her compound average return : Paula decides to sell the 500 shares of Microsoft, Inc (MSFT) that she bought 7 years ago for $38.50. If the current price is $41.02, what is her compound (geometric) average return?

Reflected in the required return of the bonds : Tom Cruise Lines Inc. issued bonds five years ago at $1,000 per bond. These bonds had a 20-year life when issued and the annual interest payment was then 13 percent. Real rate of return 3 % Inflation premium 5 Risk premium 5 Total return 13 % Assume ..

Assume that the average cost per case drops : Start with the original assumptions. Notice that managed care plan #1 receives a much lower price in return for sending a larger volume of patients. Assume that the average cost per case drops to $90 due to the economies of scale. All other assumptio..

Corporate bonds and treasury bonds of similar maturities : The credit spread is the difference in YTM between corporate bonds and Treasury bonds of similar maturities. Explain why the credit spread correlates closely with stock volatility across time?

User Account

All Pages