Calculating Costs of Issuing Debt Basketball Games, Inc

question 73

Multiple Choice

Calculating Costs of Issuing Debt Basketball Games, Inc., with the help of its investment bank recently issued $5 million of new debt. The offer price (and face value) on the debt was $1,000 per bond and the underwriter's spread was 6 percent of the gross proceeds. What is the amount of capital funding Basketball Games, Inc., raised through this debt offering?

• A) $1,000
• B) $0.30 million
• C) $4.7 million
• D) $5 million

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