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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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