A company's long-term bonds are being sold at 109% of face value. The bond matures after 12 years and pays an annual coupon of 7.5%. The cost of the bond for the company is 5.6% 6.4% 7.5% None of the above alternatives

A company's long-term bonds are being sold at 109% of face value. The bond matures after 12 years and pays an annual coupon of 7.5%. The cost of the bond for the company is 5.6% 6.4% 7.5% None of the above alternatives

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 2P

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Question

A company's long-term bonds are being sold at 109% of face value. The bond matures after 12 years and pays an annual coupon of 7.5%. The cost of the bond for the company is

5.6%

6.4%

7.5%

None of the above alternatives

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