1. How much cash would Deere have to pay to repurchase the 7.125% notes at the quoted market price of 135.13. (Assume no interest is owed when Deere repurchases the notes.) (Round your answer to two decimal places.)
Assume Deere & Company's 2012 10-K reports the following footnote relating to long-term debt. Deere's borrowings include $350 million, 7.125% notes, due in 2031 (bolded below).
Long-term borrowings at October 31 consisted of the following in millions of dollars:
| 7.85% debentures due 2015 |
$ 306 |
$ 306 |
| 6.95% notes due 2019: ($700 principal) Swapped to variable interest rates of 6.1%-2012, 6.4%-2011 |
743 |
734 |
| 8.95% debentures due 2019 |
56 |
56 |
| 8-1/2% debentures due 2022 |
105 |
105 |
| 6.55% debentures due 2028 |
200 |
200 |
| 8.10% debentures due 2030 |
200 |
200 |
| 7.125% notes due 2031 |
350 |
350 |
| Other notes |
13 |
18 |
| Total |
$ 1,973 |
$ 1,969 |
A recent price quote (from Yahoo! Finance Bond Center) on Deere's 7.125% notes follows.
| Corp |
Deere & CO |
135.13 |
7.125 |
3-Mar-2031 |
4.588 |
5.273 |
A |
No |
This price quote indicates that Deere's 7.125% notes have a market price of 135.13 (135.13% of face value), resulting in a yield to maturity of 4.588%.