Homework Helper

Not Rated (0)

$17/per page/

About Homework Helper

Levels Tought:
Elementary,Middle School,High School,College,University,PHD

Expertise:
Accounting,Applied Sciences See all
Accounting,Applied Sciences,Art & Design,Chemistry,Economics,Essay writing Hide all
Teaching Since: Apr 2017
Last Sign in: 418 Weeks Ago, 6 Days Ago
Questions Answered: 3232
Tutorials Posted: 3232

Education

  • MBA,MCS,M.phil
    Devry University
    Jan-2008 - Jan-2011

  • MBA,MCS,M.Phil
    Devry University
    Feb-2000 - Jan-2004

Experience

  • Regional Manager
    Abercrombie & Fitch.
    Mar-2005 - Nov-2010

  • Regional Manager
    Abercrombie & Fitch.
    Jan-2005 - Jan-2008

Category > Business & Finance Posted 22 May 2017 My Price 7.00

The Landers Corporation needs to raise $1.70 million

The Landers Corporation needs to raise $1.70 million of debt on a 20-year issue. If it places the bonds privately, the interest rate will be 12 percent. 25000 dollars in out-of-pocket costs will be incurred. For a public issue, the interest rate will be 11 percent, and the underwriting spread will be 3 percent. There will be $110,000 in out-of-pocket costs. Assume interest on the debt is paid semiannually, and the debt will be outstanding for the full 20-year period, at which time it will be repaid. Use AppendixB andAppendix D.

 

(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 13 percent annually. Use 6.50 percent semiannually throughout the analysis. (Disregard taxes.) (Round "PV Factor" to 3 decimal places. Amounts to be deducted should be indicated with a minus sign. Enter your answers in dollars not millions rounded to nearest whole number.)

 

Private placement
Net amount to Landers $
Present value of future payments  
 
Net present value (private offering) $
 

 

Public issue
Net amount to Landers $
Present value of future payments  
 
Net present value (public offering) $
 

 

(b) Which plan offers the higher net present value?
   
 
  Private placement
  Public issue

Answers

Homework Helper
Not Rated (0)
Status NEW Posted 22 May 2017 02:05 PM My Price 7.00

Hel-----------lo -----------Sir-----------/Ma-----------dam----------- T-----------han-----------k Y-----------ou -----------for----------- us-----------ing----------- ou-----------r w-----------ebs-----------ite----------- an-----------d a-----------cqu-----------isi-----------tio-----------n o-----------f m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l

Not Rated(0)