Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you need to choose between making a public offerin

You need to choose between making a public offering and arranging a private placement. In...

50.1K

Verified Solution

Question

Accounting

You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.7 million face value of 10-year debt. You have the following data for each:

  • A public issue: The interest rate on the debt would be 8.85%, and the debt would be issued at face value. The underwriting spread would be 1.57%, and other expenses would be $87,000.
  • A private placement: The interest rate on the private placement would be 9.7%, but the total issuing expenses would be only $37,000.

  1. a-1. Calculate the net proceeds from public issue. (Enter your answer in dollars not millions of dollars.)

  2. a-2. Calculate the net proceeds from private placement. (Enter your answer in dollars not millions of dollars.)

  3. b-1. Calculate the Present Value of the extra interest on the private placement. (Do not round intermediate calculations. Enter your answer in dollars not millions of dollars. Round your answer to the nearest whole dollar amount.)

  4. b-2. Other things being equal, which is the better deal?

Prev
Question4of4Total4 of 4
Visit question mapThis is the last question in the assignment. To submit, use Alt + S. To access other questions, proceed to the question map button.Next

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

Bird Corporation has a 0.1 probability of a return of -0.23, a 0.1 probability of a...

Biology
1.2K views

Questions 6: Gene Expression Regulation (9 pts) Heart defects from genetically inherited mutations affect about 1-2%...

Physics
1.2K views

Two satellites are in circular orbits around the earth. The orbit for satellite A is at...

Basic Math
1.2K views

A group of 1000 students wrote an entrance exam for the University of Statistics. The mean...

Accounting
1.2K views

It has been said that qualitative research uses “emerging research designs” while quantitative research uses “predetermined...

Physics
1.2K views

30V 192 til ww 10V ww 19 20 Find current through 20 resistor 1 2A...

Physics
1.2K views

A light spring of length 20 cm and force constant 2 N cm is placed...

Accounting
1.2K views

The following information applies to the operations of MK Inc. for 2018 and 2019. Assume...

Accounting
1.2K views

Maliyet muhasebesi sistemi nedir? Maliyet muhasebesi sistemi bir iletme iin neden nemlidir? Maliyet muhasebesi sistemi...

Accounting
1.2K views

help me with this general journal of sales report

Accounting
1.2K views

Leo Consulting enters into a contract with Highgate University to restructure Highgate's processes for purchasing...

Finance
1.2K views

The WACC is used as the discount rate to evaluate various capital budgeting projects. However,...