All of the Following Methods Can Be Used to Estimate

question 17

Multiple Choice

All of the following methods can be used to estimate the cost of debt except:

• A)If the firm targets an "A" rating (or any other bond rating),a review of the yields to maturity on A-rated bonds in the business section of the local newspaper can provide an estimate of the firm's current borrowing costs.
• B)The firm can solicit the advice of personal financial planners on the cost of issuing new debt.
• C)If the firm has debt currently trading,it can send a survey to current owners of its bonds to find out what rate the firm should offer.
• D)A firm can seek long-term debt financing from a wealthy individual;preliminary discussions with the individual will indicate a ballpark interest rate the firm can expect to pay on its borrowing.
• E)None of the above statements are correct.

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