In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year maturity, a 8.5% coupon rate, and semi-annual interest payments on a $1,000 Par value. When they originated, the bonds sold at par. Since origination, the required rate of return on LoloLimon bonds has hovered between a low of 7.25% to a high of 12.5% and currently sell at $45 below par value. What is the current cost of debt (ra) for LoloLimon?
In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year maturity, a 8.5% coupon rate, and semi-annual interest payments on a $1,000 Par value. When they originated, the bonds sold at par. Since origination, the required rate of return on LoloLimon bonds has hovered between a low of 7.25% to a high of 12.5% and currently sell at $45 below par value. What is the current cost of debt (ra) for LoloLimon?
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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Transcribed Image Text:In December 2010, LoloLimon issued $100 million in bonds. These bonds originally had a 25 year maturity, a 8.5% coupon rate, and semi-annual interest payments on a $1,000 Par value. When they originated, the bonds sold at par. Since origination, the required rate of return on
LoloLimon bonds has hovered between
low of 7.25% to a high of 12.5% and currently sell at $45 below par value. What is the current cost of debt (ra) for LoloLimon?
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