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Input area:
Years to maturity 20
Required return 7.50%
Amount needed 50,000,000$
Face value 1,000$
Coupon rate 7.50%
Tax rate 21%
Year bond is called 7
Spread above Treasury 0.40%
Treasury rate at call 4.80%
Treasury rate at call 8.20%
Output area:
2) Price of coupon bond 1,000$
4) Year 1 interest payments:
Pretax coupon payment 3,750,000$
Chapter 8
Financing East Coast Yachts Expansion Plans with a Bond Issue
