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Homework answers / question archive / Q3
Q3. Cost of debt with fees. ? Dunder-Mifflin, Inc.? (DMI) is selling? 600,000 bonds to raise money for the publication of new magazines in the coming year. The bonds will pay a coupon rate of 9.8?% with semiannual payments and will mature in 30 years. Its par value is ?$100. DMI hires an investment banker for the sale of the? 600,000 bonds. The investment banker charges a fee of 3?% on each bond sold. What is the cost of debt to DMI if the following are the proceeds before the? banker's fees are? deducted?
What is the cost of debt to DMI if the bond proceeds? Before the? banker's fees are? deducted?:
a. ?$42,972,000
b. ?$49,872,000
c. ?$67,584,000
d. ?$81,708,000
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