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Assume Deere & Company’s 2016 10-K reports the following footnote relating to long-term debt. Deere’s borrowings include $200 million, 6.55% debentures (unsecured bonds), due in 2028 (highlighted below). Long-term borrowings at October 31 consisted of the following in millions of dollars: [Added in the picture]   A recent price quote on Deere’s 6.55% debentures indicates that Deere’s bonds have a market price of 108.104 (108.104% of face value), resulting in a yield to maturity of 5.89%. How much cash would Deere have to pay to repurchase the 6.55% debentures at the quoted market price of 108.104? (Assume no interest is owed when Deere repurchases the debentures.)   a. $200.000 million b. $213.100 million c. $211.780 million d. $216.208 million

Assume Deere & Company’s 2016 10-K reports the following footnote relating to long-term debt. Deere’s borrowings include $200 million, 6.55% debentures (unsecured bonds), due in 2028 (highlighted below). Long-term borrowings at October 31 consisted of the following in millions of dollars: [Added in the picture]   A recent price quote on Deere’s 6.55% debentures indicates that Deere’s bonds have a market price of 108.104 (108.104% of face value), resulting in a yield to maturity of 5.89%. How much cash would Deere have to pay to repurchase the 6.55% debentures at the quoted market price of 108.104? (Assume no interest is owed when Deere repurchases the debentures.)   a. $200.000 million b. $213.100 million c. $211.780 million d. $216.208 million

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Assume Deere & Company’s 2016 10-K reports the following footnote relating to long-term debt. Deere’s borrowings include $200 million, 6.55% debentures (unsecured bonds), due in 2028 (highlighted below).
Long-term borrowings at October 31 consisted of the following in millions of dollars:

[Added in the picture]

 

A recent price quote on Deere’s 6.55% debentures indicates that Deere’s bonds have a market price of 108.104 (108.104% of face value), resulting in a yield to maturity of 5.89%.
How much cash would Deere have to pay to repurchase the 6.55% debentures at the quoted market price of 108.104? (Assume no interest is owed when Deere repurchases the debentures.)

 

a. $200.000 million
b. $213.100 million
c. $211.780 million
d. $216.208 million

 

Notes and debentures 2016 2015 Medium-term notes: Average interest rate of 9.2%-2015 5-7/8% U.S. dollar notes due 2018: ($250 principal) Swapped $170 to Euro at average variable interest rates of 3.1%-2015. $ 20 250 7.85% debentures due 2020 6.95% notes due 2021: ($700 principal) Swapped to variable interest rates of 5.2%-2016, 3.1%-2015...... $ 500 500 744 786 8.95% debentures due 2021. 200 200 8-1/2% debentures due 2022. 200 200 6.55% debentures due 2028 8.10% debentures due 2030 200 200 250 250 7.125% notes due 2031 300 300 Other notes 29 22 Total. $2,423 $2,728
Transcribed Image Text:Notes and debentures 2016 2015 Medium-term notes: Average interest rate of 9.2%-2015 5-7/8% U.S. dollar notes due 2018: ($250 principal) Swapped $170 to Euro at average variable interest rates of 3.1%-2015. $ 20 250 7.85% debentures due 2020 6.95% notes due 2021: ($700 principal) Swapped to variable interest rates of 5.2%-2016, 3.1%-2015...... $ 500 500 744 786 8.95% debentures due 2021. 200 200 8-1/2% debentures due 2022. 200 200 6.55% debentures due 2028 8.10% debentures due 2030 200 200 250 250 7.125% notes due 2031 300 300 Other notes 29 22 Total. $2,423 $2,728
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