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Cost of debt with fees. Dunder-Mifflin, Inc. (DMI) is selling 600,000 bonds to raise money for the publication of new magazines in the coming year. The bonds will pay a coupon rate of 11.4% with semiannual payments and will mature in 30 years. Its par value is $100. DMI hires an investment banker for the sale of the 600,000 bonds. The investment banker charges a fee of 1% on each bond sold. What is the cost of debt to DMI if the following are the proceeds before the banker's fees are deducted? a. $41,406,000 b. $49,686,000 c. $68,190,000 d. $76,926,000 a. What is the cost of debt to DMI if the bond proceeds are $41,406,000 before the banker's fees are deducted? % (Round to two decimal places.) b. What is the cost of debt to DMI if the bond proceeds are $49,686,000 before the banker's fees are deducted? (Rour

Cost of debt with fees. Dunder-Mifflin, Inc. (DMI) is selling 600,000 bonds to raise money for the publication of new magazines in the coming year. The bonds will pay a coupon rate of 11.4% with semiannual payments and will mature in 30 years. Its par value is $100. DMI hires an investment banker for the sale of the 600,000 bonds. The investment banker charges a fee of 1% on each bond sold. What is the cost of debt to DMI if the following are the proceeds before the banker's fees are deducted? a. $41,406,000 b. $49,686,000 c. $68,190,000 d. $76,926,000 a. What is the cost of debt to DMI if the bond proceeds are $41,406,000 before the banker's fees are deducted? % (Round to two decimal places.) b. What is the cost of debt to DMI if the bond proceeds are $49,686,000 before the banker's fees are deducted? (Rour

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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Chapter 11, Question 7

Cost of debt with fees. Dunder-Mifflin, Inc. (DMI) is selling 600,000 bonds to raise money for the publication of new magazines in the coming year. The bonds will pay a coupon rate of 11.4% with semiannual payments and will mature in 30 years. Its par value is $100. DMI hires an investment banker for the sale of the 600,000 bonds. The investment banker charges a fee of 1% on each bond sold. What is the cost of debt to DMI if the following are the proceeds before the banker's fees are deducted? a. $41.406.000 b. $49,686,000 c. $68,190.000 d. $76,926,000 a. What is the cost of debt to DMI if the bond proceeds are $41,406,000 before the banker's fees are deducted? % (Round to two decimal places.) b. What is the cost of debt to DMI if the bond proceeds are $49,686,000 before the banker's fees are deducted? % (Round to two decimal places.) c. What is the cost of debt to DMI if the bond proceeds are $68,190,000 before the banker's fees are deducted? |% (Round to two decimal places.) d. What is the cost of debt to DMI if the bond proceeds are $76,926,000 before the banker's fees are deducted? % (Round to two decimal places.)
Transcribed Image Text:Cost of debt with fees. Dunder-Mifflin, Inc. (DMI) is selling 600,000 bonds to raise money for the publication of new magazines in the coming year. The bonds will pay a coupon rate of 11.4% with semiannual payments and will mature in 30 years. Its par value is $100. DMI hires an investment banker for the sale of the 600,000 bonds. The investment banker charges a fee of 1% on each bond sold. What is the cost of debt to DMI if the following are the proceeds before the banker's fees are deducted? a. $41.406.000 b. $49,686,000 c. $68,190.000 d. $76,926,000 a. What is the cost of debt to DMI if the bond proceeds are $41,406,000 before the banker's fees are deducted? % (Round to two decimal places.) b. What is the cost of debt to DMI if the bond proceeds are $49,686,000 before the banker's fees are deducted? % (Round to two decimal places.) c. What is the cost of debt to DMI if the bond proceeds are $68,190,000 before the banker's fees are deducted? |% (Round to two decimal places.) d. What is the cost of debt to DMI if the bond proceeds are $76,926,000 before the banker's fees are deducted? % (Round to two decimal places.)
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