A firm raises capital by selling $30,000 worth of debt with flotation costs equal to 2% of its par value. If the debt matures in 15 years and has an annual coupon interest rate of 7%, what is the bond's YTM?
A firm raises capital by selling $30,000 worth of debt with flotation costs equal to 2% of its par value. If the debt matures in 15 years and has an annual coupon interest rate of 7%, what is the bond's YTM?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 14P
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Question
A firm raises capital by selling
$30,000
worth of debt with flotation costs equal to
2%
of its par value. If the debt matures in
15
years and has an annual coupon interest rate of
7%,
what is the bond's YTM?
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