DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. ABS CBN Company thinks of acquiring a fixed asset that will improve the production capacity of the business. To finance the acquisition, IZZY plans to issue 7.8%, P1,000 face value bonds amounting to P450,000,000. The company has issued its old bonds at face value, and expects to sell the new issuance based on the P 1,000 face value. IZZY is subject to a 3 coincome tax rate. Required: Compute the cost of debt issuance.
DIRECTIONS: Read and analyze the following problems and supply what is required and support it with necessary computations. ABS CBN Company thinks of acquiring a fixed asset that will improve the production capacity of the business. To finance the acquisition, IZZY plans to issue 7.8%, P1,000 face value bonds amounting to P450,000,000. The company has issued its old bonds at face value, and expects to sell the new issuance based on the P 1,000 face value. IZZY is subject to a 3 coincome tax rate. Required: Compute the cost of debt issuance.
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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Ee 137.
Transcribed Image Text:DIRECTIONS: Read and analyze the following problems
and supply what is required and support it with
necessary computations. ABS CBN Company thinks of
acquiring a fixed asset that will improve the production
capacity of the business. To finance the acquisition, IZZY
plans to issue 7.8%, P1,000 face value bonds amounting
to P450,000,000. The company has issued its old bonds
at face value, and expects to sell the new issuance based
on the P 1,000 face value. IZZY is subject to a 3 coincome
tax rate. Required: Compute the cost of debt issuance.
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