What is the borrowing cost for this transaction

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Reference no: EM132065221

Dean Foods Ltd needs to borrow $23 million for a factory equipment upgrade. Management decides to sell 10-year bonds. They determine that the 3-month Treasury note yields 6.32 per cent, the company’s credit rating is AA, and the yield on 10-year Treasury bonds is 1.06 per cent higher than for 3-month notes. AA bonds are selling for 1.35 per cent above the 10-year Treasury bond rate. What is the borrowing cost for this transaction?

Reference no: EM132065221

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