What is the net cost of the call premium

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Reference no: EM132037934

1. Buchanan Corp. is refunding $9 million worth of 10% debt. The new bonds will be issued for 9%. The corporation's tax rate is 31%. The call premium is 9%. What is the net cost of the call premium?

$558,900

$563,400

$593,900

$573,900

2. A bond with a coupon rate of 8.3%, maturing in 12 years at a value of $1,000 and current market price of $720 will have a current yield of (Round your answer to 2 decimal places.)

12.03%

10.53%

11.53%

12.53%

3. Solow Corp. has a bond with annual interest payments of $250 maturing in 12 years at a value of $1,000 per bond. The current market price is $930. What will the nominal yield be?

29%

27%

25%

28%

4. The main cause for the increase in corporate debt in America is

rapid business expansion.

inflationary impacts.

drop in interest rates.

all of these options are true.

Reference no: EM132037934

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