Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Chapter 16, Problem 14DQ
Summary Introduction

To explain: The reason why the cost of capital is used for the evaluation of the decision to refund a bond and also explain the reason behind it.

Introduction:

Bond:

It is a long-term loan borrowed by the corporations, organizations, and the government for the

purpose of raising capital. It is issued at a fixed interest depending upon the reputation of the

corporations and also termed as fixed-income security.

Bond refunding:

It means paying off higher-cost debt bonds to the issuer of the bonds with a lower net cost. This decreases the financial cost of any firm.

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Loose Leaf for Foundations of Financial Management Format: Loose-leaf

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