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:

Assembly Workers

Individuals who specialize in putting together components of products in manufacturing plants or factories.

Self-promotion

The act of highlighting one's own skills, achievements, or qualities to advance personal or professional goals.

Image Enhancement

Strategies and activities aimed at improving the public perception or reputation of an individual, organization, or brand.

Ingratiation

A psychological technique wherein an individual attempts to become more attractive or likable to their target.