Katydid before-tax component cost of debt

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Reference no: EM131888353

1. You are borrowing $5,540 to buy a car. The terms of the loan call for monthly payments for 4 years at a 6.00 percent interest compounded monthly. What is the amount of each payment?

2. KatyDid Clothes has a $170 million (face value) 25-year bond issue selling for 106 percent of par that carries a coupon rate of 13 percent, paid semiannually. What would be Katydid’s before-tax component cost of debt?

3. Suppose you own 338 shares of stock and want to hedge by purchasing put options. A put option is available on the stock and has a delta of -0.7. How many options are needed to create the hedge? Enter your answer rounded to the nearest integer.

Reference no: EM131888353

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