Check my work10 percent. Thirty thousand dollars in out-of-pocket costs will be incurred. For a public issue, the interest rate will be 9 percent, and theunderwriting 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 anapproximate 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 andprincipal to determine net present value. Assume the stated discount rate is 12 percent annually. Use 6.00 percent semiannuallythroughout the analysis. (Disregard taxes.)Note: Assume the $1.00 million needed includes the underwriting costs. Input your present value of future payments answersas negative values. Do not round intermediate calculations and round your answers to 2 decimal places.Private PlacementPublic IssueNet amount to Landers$970,000.00Present value of future paymentsNet present value$970,000.00$0.00

Net Amount to Lenders:This is the initial amount available after out-of-pocket costs: $1,000,000…

Answered: Check my work 10 percent. Thirty…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 24P

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