a)Use the following
QD=-53P+355
Qs=32P+65
Round your answer to the nearest hundredth
b)Jack is looking to determine the difference in the cost of capital of debt between two debt issuers: Issuer One is selling the bond at par, with a face value of $1000, and semi-annual coupon payments of $60
Issuer Two is selling his bond at par, with a face value of $1100 and coupon payments of $50 every six months. However, Issuer Two must pay issuing expenses of $40 per bond, and a discount of $20. Both bonds term to maturities are expected to be 10 years. Help Jack to determine the difference in the cost of capital between these two bonds? Assume a tax rate of 40%
A 2.34%
B 0.02%
C 6.34%
D 7.37%
E 1.31%
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