Calculating Costs of Issuing Debt Just Add Water, Inc

question 56

Multiple Choice

Calculating Costs of Issuing Debt Just Add Water, Inc., with the help of its investment bank recently issued $200,000,000 of new debt. The offer price on the debt was $1,000 per bond and the underwriter's spread was 4 percent of the gross proceeds. What amount of capital funding did Just Add Water, Inc., raise through this bond issue?

• A) $1,000
• B) $8,000,000
• C) $192,000,000
• D) $200,000,000

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Definitions:

Synectics

A problem-solving methodology that stimulates thought processes of which the participants are usually unaware, often used in group settings to foster creativity.

Creative Thinking

The ability to think outside the box and generate innovative ideas or solutions to problems.

Triggering

The process of initiating a response, reaction, or series of events, especially when relating to psychological reactions to stimuli.

Nominal Group Technique

A structured method for group brainstorming that encourages contributions from everyone by having members write down their ideas and then discuss them collectively.