1 katydid clothes has a 180 million face value 20-year bond, Ask an Expert

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1. KatyDid Clothes has a $180 million (face value) 20-year bond issue selling for 105 percent of par that carries a coupon rate of 7 percent, paid semiannually. What would be Katydid’s before-tax component cost of debt? (Round your answer to 2 decimal places.)

2. A Treasury bond that matures in 5 years has a yield of 10.0%. A 5-year corporate bond has a yield of 25.00%. Assume that the liquidity premium on the corporate bond is 0.25%. What is the default risk premium on the corporate bond?

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Financial Management, Finance

Category:- Financial Management
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