LiveBetter Can Choose Between the Two Following Issues

question 58

Essay

LiveBetter can choose between the two following issues:
a. A public issue of $10 million face value of 10-year debt. The interest rate on the debt would be 8.5% and the debt would be issued at face value. The underwriting spread would be 1.5% and other expenses would be $80,000.
b. A private placement of $10 million face value of 10-year debt. The interest rate on the debt would be 9% and the total issuing expenses would be $30,000.
Which deal should LiveBetter choose?

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Definitions:

Snore Loudly

The act of producing loud breathing sounds while asleep, often due to partial obstruction of the airways.

Sleep-Wake Diary

A record kept over a period of time noting the times one goes to sleep and wakes up to analyze sleep patterns and disturbances.

24 Hours

A full day; the total number of hours in a single day.

1 to 2 Weeks

A time frame indicating a short period, often used to define the duration of an event, process, or the onset of effects.