What is the pre-tax cost of debt for the newly-issued bonds

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Reference no: EM132038261

Reuven Corp. is undergoing a major expansion. The expansion will be financed by issuing new 12-year, $1,000 par, 7% semiannual coupon bonds. The market price of the bonds is $940 each. Reuven’s floatation expense on the new bonds will be $70 per bond. What is the pre-tax cost of debt for the newly-issued bonds?

A) 7.91%

B) 8.24%

C) 8.77%

D) 9.18%

Shanks Inc. would like to finance an experimental cost saving procedure by issuing new common stock. The corporation’s existing common stock currently sells for $49.74. Management believes that they can issue new common stock at this price, incurring floatation costado 5.53% forge current market price. What is the stock’s net market price (net proceeds)? Submit your answer as a dollar amount and round your answer to two decimal places ($0.00)

Reference no: EM132038261

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