Things Get Messi Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 25.00 year maturities with a coupon rate of 7.25% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond). The current market rate for similar bonds is 5.82% APR. The company hopes to raise $59.00 million with the new issue. Based on the current market rate, what will a new bond sell for? Answer format: Currency: Round to: 2 decimal places.

Things Get Messi Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 25.00 year maturities with a coupon rate of 7.25% APR with semi-annual coupon payments (assume a face value of $1,000 on the bond). The current market rate for similar bonds is 5.82% APR. The company hopes to raise $59.00 million with the new issue. Based on the current market rate, what will a new bond sell for? Answer format: Currency: Round to: 2 decimal places.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 32P

See similar textbooks

Similar questions

Things Get Messi Enterprises is issuing new bonds for a capital budgeting project. The bonds will have 25.00 year maturities with a coupon rate of 6.50% APR with semi - annual coupon payments (assume a face value of $1,000 on the bond). The current market rate for similar bonds is 5.24% APR. The company hopes to raise $38.00 million with the new issue. Based on the current market rate, what will a new bond sell for?
Setrakian Industries needs to raise $71.8 million to fund a new project. The company will sell bonds that have a coupon rate of 5.78 percent paid semiannually and that mature in 25 years. The bonds will be sold at an initial YTM of 6.46 percent and have a par value of $2,000. How many bonds must be sold to raise the necessary funds?
Sincere Stationary Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 12 percent annual coupon rate and a 10 year maturity. If floatation costs are 10.5 percent of the market price, how many bonds will the firm have to issue to receive the needed funds?
Mary, Inc. is considering a project for next year, which will cost $5 million. Mary plans to use the following combination of debt and equity to finance the investment. Issue $1.5 million of 10-year bonds at a price of 101, with a coupon/contract rate of 4%, and flotation costs of 2% of par. Use $3.5 million of funds generated from retained earnings. The equity market is expected to earn 8%. U.S. Treasury bonds are currently yielding 3%. The beta coefficient for Mary, Inc. is estimated to be .70. Mary is subject to an effective corporate income tax rate of 30 percent. Compute Mary's expected rate of return using the Capital Asset Pricing Model (CAPM). Please show calculations.
Gargoyle Unlimited is planning to issue a zero-coupon bond to fund a project that will yield its first positive cash flow in three years. That cash flow will be sufficient to pay off the entire debt issue. The bond's par value will be $1,000, it will mature in 3 years, and it will sell in the market for $727.25. The firm's marginal tax rate is 40 percent.Refer to Gargoyle Unlimited. What is the expected after-tax cost of this debt issue? Group of answer choices 6.10% 6.72% 11.20% 4.00% 4.48%