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How much cash will cheesecake receive

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Question - Assume that on January 1, 2010, Cheesecake decides to issue $500 million of face value bonds that pay interest semi-annually. The proceeds from the bonds will allow the company embark on a significant expansion plan across the country and internationally. The bonds mature in 10 years and have a stated rate (coupon) of 8.5% while the market rate (required rate of return) is 9.25%.

a. How much cash will Cheesecake receive from the issuance of these bonds?

b. How much will interest expense be for these bonds in 2010 and 2011?

Reference no: EM131691083

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