1. Buchanan Corp. is refunding $9 million worth of 10% debt. The new bonds will be issued for 9%. The corporation's tax rate is 31%. The call premium is 9%. What is the net cost of the call premium?
$558,900
$563,400
$593,900
$573,900
2. A bond with a coupon rate of 8.3%, maturing in 12 years at a value of $1,000 and current market price of $720 will have a current yield of (Round your answer to 2 decimal places.)
12.03%
10.53%
11.53%
12.53%
3. Solow Corp. has a bond with annual interest payments of $250 maturing in 12 years at a value of $1,000 per bond. The current market price is $930. What will the nominal yield be?
29%
27%
25%
28%
4. The main cause for the increase in corporate debt in America is
rapid business expansion.
inflationary impacts.
drop in interest rates.
all of these options are true.