Calculating Costs of Issuing Debt Soccer Games, Inc

question 105

Multiple Choice

Calculating Costs of Issuing Debt Soccer Games, Inc., with the help of its investment bank recently issued $10 million of new debt. The offer price (and face value) on the debt was $1,000 per bond and the underwriter's spread was 5 percent of the gross proceeds. What is the amount of capital funding Soccer Games, Inc., raised through this debt offering?

• A) $1,000
• B) $0.5 million
• C) $9.5 million
• D) $10 million

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Definitions:

Reasoning

The process of thinking about something in a logical way in order to form a conclusion or judgment.

Inductive

An intellectual procedure that involves synthesizing a number of premises, deemed true or usually validated, to achieve a distinct conclusion.

Prosocial Behavior

Actions intended to benefit others, including helping, sharing, donating, cooperating, and volunteering.

Subcontrary Propositions

In traditional logic, propositions that cannot both be false but can both be true.