You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $9.7 millionface value of 10-year debt. You have the following data for each:• A public issue: The interest rate on the debt would be 8.35%, and the debt would be issued at face value. The underwriting spreadwould be 1.63%, and other expenses would be $77,000.A private placement. The interest rate on the private placement would be 8.7%, but the total issuing expenses would be only$27,000..Required:a-1. Calculate the net proceeds from public issue.a-2. Calculate the net proceeds from private placement.b-1. Calculate the PV of the extra interest on the private placement.b-2. Other things being equal, which is the better deal?Complete this question by entering your answers in the tabs below.Req a1 and a2 Req b1 and b2Calculate the net proceeds from public issue and private placement. (Do not round intermediate calculations. Enter youranswers in dollars not millions.)a-1. From public issuea-2. From private placementNet Proceeds< Req a1 and a2Req b1 and b2 > Req a1 and a2 Req b1 and b2Calculate the PV of the extra interest on the private placement and other things being equal, which is the better deal? (Do notround intermediate calculations. Enter your answer in dollars not in millions. Round your answer to the nearest whole dollar.)b-1. PV of extra interestb-2. Other things being equal, which is the better deal?< Req a1 and a2Req b1 and b2 >

a-1.The net proceeds from the public issue is

You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $9.7 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 8.35%, and the debt would be issued at face value. The underwriting spread would be 1.63%, and other expenses would be $77,000. • A private placement. The interest rate on the private placement would be 8.7%, but the total issuing expenses would be only $27,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal?

You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $9.7 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 8.35%, and the debt would be issued at face value. The underwriting spread would be 1.63%, and other expenses would be $77,000. • A private placement. The interest rate on the private placement would be 8.7%, but the total issuing expenses would be only $27,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.3 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 8.65%, and the debt would be issued at face value. The underwriting spread would be 1.53%, and other expenses would be $83,000. • A private placement. The interest rate on the private placement would be 9.3%, but the total issuing expenses would be only $33,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal? Complete this question by entering your answers in the tabs below. Req al and a2 Req b1 and b2 Calculate the net proceeds from public issue and private placement. (Do not round intermediate calculations. Enter your answers in dollars…
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%, and the debt would be issued at face value. The underwriting spread would be 1.5%, and other expenses would be $80,000. A private placement. The interest rate on the private placement would be 9% , but the total issuing expenses would be only $30,000 a-1. Calculate the net proceeds from public issue. Note: Enter your answer in dollars not millions of dollars. a-2. Calculate the net proceeds from private placement. Note: Enter your answer in dollars not millions of dollars. b-1. Calculate the Present Value of the extra interest on the private placement. Note: Do not round intermediate calculations. Enter your answer in dollars not millions of dollars. Round your answer to the nearest whole dollar amount. b-2. Other things being…
You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.9 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 8.95%, and the debt would be issued at face value. The underwriting spread would be 1.59%, and other expenses would be $89,000. A private placement: The interest rate on the private placement would be 9.9%, but the total issuing expenses would be only $39,000. Is it possible to get these calculations in Excel a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement.
You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $10.4 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 8.7%, and the debt would be issued at face value. The underwriting spread would be 1.54%, and other expenses would be $84,000. A private placement: The interest rate on the private placement would be 9.4%, but the total issuing expenses would be only $34,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal?
I completed all of the questions except B-1. You need to choose between making a public offering and arranging a private placement. In each case, the issue involves $9.1 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 8.05%, and the debt would be issued at face value. The underwriting spread would be 1.69%, and other expenses would be $71,000. A private placement: The interest rate on the private placement would be 8.5%, but the total issuing expenses would be only $21,000. Required: a-1. Calculate the net proceeds from public issue. a-2. Calculate the net proceeds from private placement. b-1. Calculate the PV of the extra interest on the private placement. b-2. Other things being equal, which is the better deal?
Your financial advisor from Bluerock recommends you to invest in one of the plan. You want to compare and verify which of the following is the best investment option. Investment Plan A: Deposit $125,000 at the beginning and obtain $175,318.97 after 5 years.Investment Plan B: Deposit $243,000 at the beginning and obtain $319,771.42 after 7 years.Investment Plan C: Deposit $314,000 at the beginning and obtain $530,496.39 after 9 years. 1. Compute interest rate for all 3 plans. Which investment plan provides you the highest rate? 2. Your advisor updated the investment plan information yesterday. While the interest rate did not change for all 3 plans, future values of each investment are 210382.76, 415702.85, 742694.95, respectively. What would be the investment period for each plan? 3. Your advisor thinks it would be a good investment if you make an investment portfolio using all 3 investment plans suggested. He recommends investing in all 3 plans at year 0 and reinvest the money to…
Your firm is considering two one-year loan options for a $506,000 loan. The first carries fees of 2.4% of the loan amount and charges interest of 3.6% of the loan amount. The other carries fees of 1.8% of the loan amount and charges interest of 4.7% of the loan amount. a. What is the net amount of funds from each loan? b. Based on the net amount of funds, what is the true interest rate of each loan?
Your brother wants to borrow $10,750 from you. He has offered to pay you back $12,250 in a year. If the cost of capital of this investment opportunity is 11%, what is its NPV? Should you undertake the investment opportunity? Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. If the cost of capital of this investment opportunity is 11%, the NPV of the investment is $ (Round to the nearest cent.)
Mitchell Investments has offered you the following investment opportunity: $7,000 at the end of each year for the first 7 years, plus $6,000 at the end of each year from years 8 through 14, plus $3,000 at the end of each year from years 15 through 21. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest dollar. How much would you be willing to pay for this investment if you required a 8 percent rate of return?$ If the payments were received at the beginning of each year, what would you be willing to pay for this investment?$
A person has $30,000 to invest. As the person's financial consultant, you recommend that the money be invested in Treasury bills that yield 2%, Treasury bonds that yield 4%, and corporate bonds that yield 6%. The person wants to have an annual income of S1160, and the amount invested in corporate bonds must be half that invested in Treasury bills Find the amount in each investment What is the solution? Select the correct choice below and fil in any answer boxes within your choice and the amount in corporate bonds is S O A. There is one solution The amount in treasury bils is S (Type integers or decimals) the amount in treasury bonds is S O B. There are infinitely many solutions The amount in treasury bills is S where z is any real number (Simplify your answers) the amount in treasury bonds is S and the amount in corporate bonds is Sz. O C. There is no solution
Your firm is considering a one-year loan for $522,000. The fees are 2% of the loan amount and the interest rate is 4.3%. First, compute the net amount of funds from the loan. Based on this net amount, what is the true interest rate of the loan? Group of answer choices
1.You have a client that plans to put $100,000 into a brokered 5‐year CD with you. You see two 5‐year CD options on your screen that she could invest in. Which of the options provides more total return, and by how much? East Coast Bank: 6% simple West Coast Bank: 6% monthly A. West Coast; $1,062 B. East Coast; $1,062 C. East Coast; $4,885 D. West Coast; $4,885

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