Dilbert Enterprises has issued $1 billion of bonds with a sinking fund provision. With 5 years left until maturity, Dilbert Enterprises does not retire bonds as provided for in the sinking fund provision. What is the consequence of this action on the company? -Nothing as long as it still pays interest on the bonds and pays them off at maturity. -The bonds are in default as a result of violating the sinking fund covenant. -It depends on the payment history of Dilbert Enterprises. -None of the above. Renee's Boutique, Inc., needs to raise $58.07 million to finance firm expansion. In discussions with its investment bank, Renee's learns that the bankers recommend a debt issue with an offer price of $1,000 per bond and they will charge an underwriter's spread of 8.5 percent of the gross price. Calculate the net proceeds to Renee's from the sale of the debt. (Enter your answer in millions of dollars and round to 2 decimal places.)
Dilbert Enterprises has issued $1 billion of bonds with a sinking fund provision. With 5 years left until maturity, Dilbert Enterprises does not retire bonds as provided for in the sinking fund provision. What is the consequence of this action on the company? -Nothing as long as it still pays interest on the bonds and pays them off at maturity. -The bonds are in default as a result of violating the sinking fund covenant. -It depends on the payment history of Dilbert Enterprises. -None of the above. Renee's Boutique, Inc., needs to raise $58.07 million to finance firm expansion. In discussions with its investment bank, Renee's learns that the bankers recommend a debt issue with an offer price of $1,000 per bond and they will charge an underwriter's spread of 8.5 percent of the gross price. Calculate the net proceeds to Renee's from the sale of the debt. (Enter your answer in millions of dollars and round to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Dilbert Enterprises has issued $1 billion of bonds with a sinking fund provision. With 5 years
left until maturity, Dilbert Enterprises does not retire bonds as provided for in the sinking
fund provision.
What is the consequence of this action on the company?
-Nothing as long as it still pays interest on the bonds and pays them off at maturity.
-The bonds are in default as a result of violating the sinking fund covenant.
-It depends on the payment history of Dilbert Enterprises.
-None of the above.
Renee's Boutique, Inc., needs to raise $58.07 million to finance firm expansion. In
discussions with its investment bank, Renee's learns that the bankers recommend a debt
issue with an offer price of $1,000 per bond and they will charge an underwriter's spread of
8.5 percent of the gross price. Calculate the net proceeds to Renee's from the sale of the
debt. (Enter your answer in millions of dollars and round to 2 decimal places.)
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