Check my work 10 percent. Thirty thousand dollars in out-of-pocket costs will be incurred. For a public issue, the interest rate will be 9 percent, and the underwriting spread will be 2 percent. There will be $100,000 in out-of-pocket costs. Assume interest on the debt is paid semiannually, and the debt will be outstanding for the full 20-year period, at which time it will be repaid. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. For each plan, compare the net amount of funds initially available-inflow-to the present value of future payments of interest and principal to determine net present value. Assume the stated discount rate is 12 percent annually. Use 6.00 percent semiannually throughout the analysis. (Disregard taxes.) Note: Assume the $1.00 million needed includes the underwriting costs. Input your present value of future payments answers as negative values. Do not round intermediate calculations and round your answers to 2 decimal places. Private Placement Public Issue Net amount to Landers $ 970,000.00 Present value of future payments Net present value $ 970,000.00 $ 0.00
Check my work 10 percent. Thirty thousand dollars in out-of-pocket costs will be incurred. For a public issue, the interest rate will be 9 percent, and the underwriting spread will be 2 percent. There will be $100,000 in out-of-pocket costs. Assume interest on the debt is paid semiannually, and the debt will be outstanding for the full 20-year period, at which time it will be repaid. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. For each plan, compare the net amount of funds initially available-inflow-to the present value of future payments of interest and principal to determine net present value. Assume the stated discount rate is 12 percent annually. Use 6.00 percent semiannually throughout the analysis. (Disregard taxes.) Note: Assume the $1.00 million needed includes the underwriting costs. Input your present value of future payments answers as negative values. Do not round intermediate calculations and round your answers to 2 decimal places. Private Placement Public Issue Net amount to Landers $ 970,000.00 Present value of future payments Net present value $ 970,000.00 $ 0.00
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
Related questions
Question
Transcribed Image Text:Check my work
10 percent. Thirty thousand dollars in out-of-pocket costs will be incurred. For a public issue, the interest rate will be 9 percent, and the
underwriting spread will be 2 percent. There will be $100,000 in out-of-pocket costs. Assume interest on the debt is paid semiannually,
and the debt will be outstanding for the full 20-year period, at which time it will be repaid. Use Appendix B and Appendix D for an
approximate answer but calculate your final answer using the formula and financial calculator methods.
a. For each plan, compare the net amount of funds initially available-inflow-to the present value of future payments of interest and
principal to determine net present value. Assume the stated discount rate is 12 percent annually. Use 6.00 percent semiannually
throughout the analysis. (Disregard taxes.)
Note: Assume the $1.00 million needed includes the underwriting costs. Input your present value of future payments answers
as negative values. Do not round intermediate calculations and round your answers to 2 decimal places.
Private Placement
Public Issue
Net amount to Landers
$
970,000.00
Present value of future payments
Net present value
$
970,000.00
$
0.00
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education