Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.7% with semiannual payments, and will use an investment bank that charges $25 per bond for its services. What is the cost of debt for Kenny Enterprises at following market prices? a. $922.13 b. $1,004.64 c. $1,128.39 d. $1,176.87

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
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Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.7% with
semiannual payments, and will use an investment bank that charges $25 per bond for its services. What is the cost of debt for Kenny Enterprises at
following market prices?
a. $922.13
b. $1,004.64
c. $1,128.39
d. $1,176.87
Transcribed Image Text:Cost of debt with fees. Kenny Enterprises will issue a bond with a par value of $1,000, a maturity of twenty years, and a coupon rate of 8.7% with semiannual payments, and will use an investment bank that charges $25 per bond for its services. What is the cost of debt for Kenny Enterprises at following market prices? a. $922.13 b. $1,004.64 c. $1,128.39 d. $1,176.87
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