(Answered) You need to choose between making a public offering and

Finance

You need to choose between making a public offering and arranging a private placement. In each case the issue involves $10 million face value of 10-year debt. You have the following data for each:

• A public issue: The interest rate on the debt would be 8.5 percent, and the debt would be issued at face value. The underwriting spread would be 1.5 percent, and other expenses would be $80,000.

• A private placement: The interest rate on the private placement would be 9 percent, but the total issuing expenses would be only $30,000.

a. What is the difference in the proceeds to the company net of expenses?

b. Other things being equal, which is the better deal?

c. What other factors beyond the interest rate and issue costs would you wish to consider before deciding between the two offers?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9796158
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Financial management how can a financial manager use the

Financial Management How can a financial manager use the time value of money(TVM) concept to accomplish this goal?

Based on land minerals and natural resources labor and

Based on land, minerals and natural resources, labor and entrepreneurial innovation, which country do you feel has the greatest long-term potential China or Russia.

Section a objective type amp short questionspart one

Section A: Objective Type & Short Questions Part One Multiple Choices: 1. It is a concept where goods are produced without taking into consideration the choices or tastes of customers. a. Marketing mix b. Production conc ...

You have 9500 and will invest the money at an interest rate

You have $9,500 and will invest the money at an interest rate of .30 percent per month until the account is worth $15,400. How many years do you have to wait until you reach your target account value?

What is the standard hedge fund hf compensation structure

What is the standard hedge fund (HF) compensation structure and how do high watermark provision benefit or impose costs on HF investors?

1 what criteria would you use to evaluate projects in terms

1. What criteria would you use to evaluate projects in terms of selection? 2. What factors are important to included in project plans to ensure effective planning and management?

Assume now that you are an active investor and that your

Assume now that you are an active investor and that your research suggests that an investment in Disney will yield 12.5% a year for the next 5 years. Based upon the expected return of 9.95%, you would ¤Buy the stock ¤Sel ...

1 what is the value today of single payment of 2875 made 19

1) What is the value today, of single payment of $2,875 made 19 years from today, if the value is discounted at a rate of 20.00%? 2) How many years would it take an investment of $859 to grow to $12,339 at an annual rate ...

Question - in an article on edmunds website called

Question - In an article on Edmunds website called "Strategies for Smart Car Buying," Philip Reed highlights the need to focus on resale value. After 3 years, some cars are worth 55% of their original value, some only 20 ...

Consider a project to supply detroit with 28000 tons of

Consider a project to supply Detroit with 28,000 tons of machine screws annually for automobile production. You will need an initial $5,100,000 investment in threading equipment to get the project started; the project wi ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert