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Author Question: Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30-year ... (Read 87 times)

2125004343

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on: Jul 11, 2018
Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30-year maturity and a 10 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value.
 
  In addition, the firm would have to pay flotation costs of 5 percent of face value. The firm's tax rate is 35 percent. Given this information, the after-tax cost of debt for Nico Trading would be ________.
  A) 7.26
  B) 11.17
  C) 10.00
  D) 9.00

Question 2

A call feature in a bond allows bondholders to change each bond into a stated number of shares of common stock.
 
  Indicate whether the statement is true or false


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daiying98

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Reply #1 on: Jul 11, 2018
Answer to Question 1

A

Answer to Question 2

FALSE


2125004343

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Reply 2 on: Jul 11, 2018
Great answer, keep it coming :)

ricroger

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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