Issued to realize defeasance of the present issue

Assignment Help Financial Management

Reference no: EM131188531

You have decided to advance refund $10,000,000 of outstanding debt that is callable in five years. The interest rate on these bonds is 8 percent. You can issue new bonds at 6 percent. For every dollar of new debt issued, you will incur a 5 percent issuance cost. Interest payments on the present issue are $800,000 per year with no scheduled principal payments. How much new debt needs to be issued to realize defeasance of the present issue?

A. $10,004,400

B. $10,839,600

C. $11,410,105

D. $11,381,580

Reference no: EM131188531

Questions Cloud

Explain how your photograph is similar in subject matter : Explain how your photograph is similar and/or different in subject matter and meaning when compared to the photograph you selected in Part 1 of this assignment.

Consider five-year fixed-payment security : Consider a five-year fixed-payment security that has a present value of $1,500. If the annual rate of discount is 2 percent, the payment made at the end of each year is

Review the given document : Review the given document. - given the document is: Collaboration Trade Intro. - and check whether it is well punctuated.

Calculate the heat of neutralization from the following data : calculate the heat of neutralization from the following data . 200 ml of 1 M HCl is mixed with 400 ml of 0.5 M Na OH . The temperature rise in calori meter was found to be 4.4 o c . water equivalent of calorimeter is 12 g and specific heat is 1 ca..

Issued to realize defeasance of the present issue : You have decided to advance refund $10,000,000 of outstanding debt that is callable in five years. The interest rate on these bonds is 8 percent. You can issue new bonds at 6 percent. For every dollar of new debt issued, you will incur a 5 percent is..

Explain vr roadmap key components : What is VR and how this problem is getting solved. Explain VR roadmap key components: objective, deliverables, and tools by phase. How VR phases align with Six sigma process.

Free cash flows during the next three years : Suppose Alpha Company projects the following free cash flows (FCF) during the next three years, after which FCF is expected to grow at a constant rate of 4%: $20m, $40m, $50m. Its cost of debt is 6%, the tax rate is 30%, the market risk premium is 7%..

Calculate the rate in units of concentration per time : What additional information would be needed to calculate the rate in units of concentration per time?

What is the breakeven point in units for proposed product : Wabtec Development of Austin, Texas, is considering the possible introduction of a new product proposed by its research and development staff. The firm's market director estimates the product can be marketed at a price of $70. Total fixed cost is $27..

User Account

All Pages