Trinjam Limited wants to expand operations of its Port of Spain Business to San Fernando. To achieve this desired objective, Trinjam Limited must raise $75 million dollars and is seeking to issue a 25-year bond for this purpose. Assume the required return on your bond issue will be 7 percent. You’re evaluating two possible financing scenarios; 1. An 8.50 percent monthly coupon bond 2. A Zero coupon bond. Your company’s tax rate is 25 percent. a)In 30 years, what will Trinjam’s Limited repayment be, if they issue the coupon bonds? What if they issue the Zero Coupon Bond, what will be repayment be
Trinjam Limited wants to expand operations of its Port of Spain Business to San Fernando. To achieve this desired objective, Trinjam Limited must raise $75 million dollars and is seeking to issue a 25-year bond for this purpose. Assume the required return on your bond issue will be 7 percent. You’re evaluating two possible financing scenarios; 1. An 8.50 percent monthly coupon bond 2. A Zero coupon bond. Your company’s tax rate is 25 percent. a)In 30 years, what will Trinjam’s Limited repayment be, if they issue the coupon bonds? What if they issue the Zero Coupon Bond, what will be repayment be
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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Trinjam Limited wants to expand operations of its Port of Spain Business to San Fernando. To achieve this desired objective, Trinjam Limited must raise $75 million dollars and is seeking to issue a 25-year bond for this
purpose. Assume the required return on your bond issue will be 7 percent.
You’re evaluating two possible financing scenarios;
1. An 8.50 percent monthly coupon bond
2. A Zero coupon bond.
Your company’s tax rate is 25 percent.
a)In 30 years, what will Trinjam’s Limited repayment be, if they issue the coupon bonds? What if they issue the Zero Coupon Bond, what will be repayment be?
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