JUST Corporation provided the following information: 1) 9% 30million bonds outstanding with 100 par value and 10 years remaining to maturity callable at 104 2) 3 million Unamortized floatation costs and discount on old bonds 3) Corporate tax rate is 30% . The company is considering replacing the old issue with a new 30 million 8%, 10 year issue and floatation cost of 2 million. The overlap period during which both issues will be outstanding is expected to be one month. Compute for Initial cash outlay.
JUST Corporation provided the following information: 1) 9% 30million bonds outstanding with 100 par value and 10 years remaining to maturity callable at 104 2) 3 million Unamortized floatation costs and discount on old bonds 3) Corporate tax rate is 30% . The company is considering replacing the old issue with a new 30 million 8%, 10 year issue and floatation cost of 2 million. The overlap period during which both issues will be outstanding is expected to be one month. Compute for Initial cash outlay.
Chapter20: Financing With Derivatives
Section20.B: Bond Refunding Analysis
Problem 1P
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JUST Corporation provided the following
information: 1) 9% 30million bonds
outstanding with 100 par value and 10 years
remaining to maturity callable at 104 2) 3
million Unamortized floatation costs and
discount on old bonds 3) Corporate tax rate is
30% . The company is considering replacing
the old issue with a new 30 million 8%, 10 year
issue and floatation cost of 2 million. The
overlap period during which both issues will be
outstanding is expected to be one month.
Compute for Initial cash outlay.
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