In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year maturity, a 8.5% coupon rate, and semi-annual interest payments on a $1,000 Par value. When they originated, the bonds sold at par. Since origination, the required rate of return on LoloLimon bonds has hovered between a low of 7.25% to a high of 12.5% and currently sell at $45 below par value. What is the current cost of debt (ra) for LoloLimon?

In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year maturity, a 8.5% coupon rate, and semi-annual interest payments on a $1,000 Par value. When they originated, the bonds sold at par. Since origination, the required rate of return on LoloLimon bonds has hovered between a low of 7.25% to a high of 12.5% and currently sell at $45 below par value. What is the current cost of debt (ra) for LoloLimon?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 15P

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