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 13.1% 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 3% 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. $50,976,000 b. $53,316,000 c. $65,664,000 d. $78,912,000 a. What is the cost of debt to DMI if the bond proceeds are $50,976,000 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 $53,316,000 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 $65,664,000 before the banker's fees are deducted? % (Round to two decimal places.)
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 13.1% 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 3% 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. $50,976,000 b. $53,316,000 c. $65,664,000 d. $78,912,000 a. What is the cost of debt to DMI if the bond proceeds are $50,976,000 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 $53,316,000 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 $65,664,000 before the banker's fees are deducted? % (Round to two decimal places.)
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 6
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 13.1% 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 3% 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. $50,976,000
b. $53.316.000
c. $65,664,000
d. $78,912,000
a. What is the cost of debt to DMI if the bond proceeds are $50,976,000 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 $53,316,000 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 $65,664,000 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 $78,912,000 before the banker's fees are deducted?
% (Round to two decimal places.)
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