dunder-mifflin inc. (dmi) is selling 600,000 bonds to raise money for new magazi
ID: 2631329 • Letter: D
Question
dunder-mifflin inc. (dmi) is selling 600,000 bonds to raise money for new magazines to be published in the coming year. the bonds will pay a coupon rate of 13.1% on semiannual payments. The par value of the bond is $100, and the bond will mature in 30 years. DMI hires an investment banker for the sale of the 600,000 bonds. The investment banker charges a fee of 1% on each bond sold. What is the cost of debt to DMI after the investment banker's fee if the bonds proceeds are the following?
a. $42,474,000
b. $51,462,000
c. $69,552,000
d. $76,002,000
A. What is the cost of debt to DMI if the bonds raise to $57,990,000?
B. What is the cost of debt to DMI if the bonds raise to $51,780,000?
C. What is the cost of debt to DMI if the bonds raise to $69,696,000?
D. What is the cost of debt to DMI if the bonds raise to $74,070,000?
Explanation / Answer
c. $69,552,000
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