What is the net cost of the call premium


Buchanan Corp. is refunding $12 million worth of 10% debt. The new bonds will be issued for 8%. The corporation's tax rate is 35%. The call premium is 9%. What is the net cost of the call premium?

a) $390,000
b) $1,080,000
c) $702,000

Solution Preview :

Prepared by a verified Expert
Finance Basics: What is the net cost of the call premium
Reference No:- TGS0677030

Now Priced at $5 (50% Discount)

Recommended (98%)

Rated (4.3/5)