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ivolga24 [154]
2 years ago
10

A firm issues $300 million in straight bonds at an original issue discount of 0.50% and a coupon rate of 7%. The firm pays fees

of 2.0% on the face value of the bonds. The net amount of funds that the debt issue will provide for the firm is closest to which of the following?
A)$248,625,000
B)$263,250,000
C)$277,875,000
D)$292,500,000
Business
1 answer:
Aleksandr-060686 [28]2 years ago
7 0

Answer: $292,500,000

Explanation:

The following information can be derived from the question:

Issued bond = $300

Issue discount = 0.50%

Coupon rate = 7%.

Fees paid = 2.0%

The net amount of funds that the debt issue will provide for the firm will be:

= Issued bond price - Discount - Fees paid

= $300m - ($300m × 0.50%) - ($300m × 2.0%)

= $300m - $1.5m - $6m

= $300m - $7.5m

= $292.5 Million

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From the set $\{1, 2, 3, \dots, 20\},$ ten numbers are chosen at random, forming a subset. Let $M$ be the largest element among
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The largest element can be as small as 10, which happens when the subset is {1, 2, ..., 10}.  The probability of choosing this subset is (1/2)^10 = 1/1024.  (Every element from 1 to 10 can either be in the subset, or not.)

The largest element can also be 11.  All the numbers in the subset must be from 1 to 10, and we must choose 1 to leave out, so the probability that the largest element is 11 is C(10,1)*1/1024.

The largest element can also be 12.  All the numbers in the subset must be from 1 to 11, and we must choose 2 to leave out, so the probability that the largest element is 12 is C(11,2)*1/1024.

We can do the other cases similarly:

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Largest element is 14 -> C(13,4)*1/1024

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Adding these up, we get (1 + C(10,1) + C(11,2) + ... + C(19,10))*1/1024.  Since 1 = C(9,0), we also get (C(9,0) + C(10,1) + C(11,2) + ... + C(19,10))*1/1024.

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Answer:

The correct answer is option (B).

Explanation:

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Bond carrying value = $1,470,226

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So, we can calculate the the bond interest expense on the first interest payment by using following formula:

The bond interest expense = Bond carrying value × rate of interest (semiannual)

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Answer: $6780

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