Dairy corp has a 20 million bond obligation outstanding

Reference no: EM13583149

Dairy Corp. has a $20 million bond obligation outstanding, which it is considering refunding. The bonds were issued at 8% and the interest rates on similar bonds have declined to 6%. The bonds have five years of their 20-year maturity remaining. The new bond will have a five-year maturity. Dairy will pay a call premium of 5% and will incur new underwriting cost of $400,000 immediately. There is no underwriting cost consideration on the old bond. The company is in a 40% tax bracket . To analyze the refunding decision, use a 5% discount rate. Should the old issue be refunded?

Reference no: EM13583149

Questions Cloud

We have talked about return on investment roi and residual : we have talked about return on investment roi and residual income calculations being used to incentivize managers.

An uncharged solute s is transported by symport with h the : 1. an uncharged solute s is transported by symport with h. the delta psi is -120 mv and the delta ph is 1.a what is the

Assume that the population standard deviation is 5 hours : q1. with random sampling there is homogeneity within a subgroup or stratum.a. judgmental b. simple c. clusterd.

The uniform distribution over the interval 85 to 125 : a machine is set to pump water into a pool at the rate of 10 gallons per minute. upon inspection it is learned that

Dairy corp has a 20 million bond obligation outstanding : dairy corp. has a 20 million bond obligation outstanding which it is considering refunding. the bonds were issued at 8

An airline reports that it has been experiencing a 17 rate : an airline reports that it has been experiencing a 17 rate of noshow on advanced reservations. among 150 advanced

If a companys assets such as accounts receivable or : 1. which of the following accounting concepts do accountants and auditors assess by using financial analyses?a. time

One hundred policyholders file claims with stressfree : q1. one hundred policyholders file claims with stressfree insurance. ten of these claims are fraudulent. claims manager

Suppose that prices of a certain model of new homes are : suppose that prices of a certain model of new homes are normally distruted with a mean of 142000 and a standard

User Account

All Pages