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Business, 14.12.2019 00:31 zitterkoph

The landers corporation needs to raise $2.20 million of debt on a 25-year issue. if it places the bonds privately, the interest rate will be 16 percent. thirty thousand dollars in out-of-pocket costs will be incurred. for a public issue, the interest rate will be 15 percent, and the underwriting spread will be 3 percent. there will be $80,000 in out-of-pocket costs. assume interest on the debt is paid semiannually, and the debt will be outstanding for the full 25-year period, at which time it will be repaid. use appendix b and appendix d for an approximate answer but calculate your final answer using the formula and financial calculator methods.

required:
a. for each plan, compare the net amount of funds initially available—inflow—to the present value of future payments of interest and principal to determine net present value. assume the stated discount rate is 18 percent annually. use 9.00 percent semiannually throughout the analysis. (disregard taxes.)

i. net amount to landers
ii. present value of future payments
iii. net present value

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The landers corporation needs to raise $2.20 million of debt on a 25-year issue. if it places the bo...
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