Sandlot co needs to borrow 17 million for a factory, Ask an Expert

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Sandlot Co. needs to borrow $17 million for a factory equipment upgrade. Management decides to sell 10-year bonds. They determine that the 3-month Treasury bill rate is 3.84 percent, the firm’s credit rating is Baa, and the yield on 10-year Treasury bonds is 1.36 percent higher than that for 3-month Treasury bills. Bonds with a Baa rating are selling for 75 basis points above the 10-year Treasury bond rate. What is the borrowing cost to do this transaction? (Round answer to 2 decimal places, e.g. 15.21.) Please show breakdown of equation.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92363500

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