It is 2030 and the yields on corporate bonds are as follows: Aaa 8.13% A 10.13% Ba 12.13% Tau Corporation wishes to raise $36 million by an issue of 9% 10-year bonds. Assume a face value of $100 and annual coupons. What will be the likely issue price (as a percent of face value) if Tau is rated (a) Aaa, (b) A, or (c) Ba? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Aaa bond price % of face value. b. A bond price % of face value. c. Ba bond price % of face value.
It is 2030 and the yields on corporate bonds are as follows: Aaa 8.13% A 10.13% Ba 12.13% Tau Corporation wishes to raise $36 million by an issue of 9% 10-year bonds. Assume a face value of $100 and annual coupons. What will be the likely issue price (as a percent of face value) if Tau is rated (a) Aaa, (b) A, or (c) Ba? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Aaa bond price % of face value. b. A bond price % of face value. c. Ba bond price % of face value.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:It is 2030 and the yields on corporate bonds are as follows:
Aaa
8.13%
A
10.13%
Ba
12.13%
Tau Corporation wishes to raise $36 million by an issue of 9% 10-year bonds. Assume a face value of $100 and annual coupons. What
will be the likely issue price (as a percent of face value) if Tau is rated (a) Aaa, (b) A, or (c) Ba?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
a. Aaa bond price
% of face value.
b. A bond price
% of face value.
c. Ba bond price
% of face value.
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