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question 12

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Use the information for the question(s) below.
Luther Industries needs to raise $25 million to fund a new office complex.The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments) .The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings: Use the information for the question(s) below. Luther Industries needs to raise $25 million to fund a new office complex.The company plans on issuing ten-year bonds with a face value of $1000 and a coupon rate of 7.0% (annual payments) .The following table summarizes the YTM for similar ten-year corporate bonds of various credit ratings:   -Suppose that when these bonds were issued,Luther received a price of $972.42 for each bond.What is the likely rating that Luther's bonds received? A) AA B) BBB C) B D) A
-Suppose that when these bonds were issued,Luther received a price of $972.42 for each bond.What is the likely rating that Luther's bonds received?


Definitions:

Treasury Stock

Stock that has been issued but has been bought back by the corporation or received as a gift.

Net Cash

Describes the amount of cash remaining after all cash expenditures, or disbursements, are subtracted from the cash receipts during a given period.

Indirect Method

A method used in accounting to calculate cash flows from operating activities, adjusting net income by changes in non-cash accounts.

Direct Method

A technique used in cash flow statements to present cash activities directly related to operating activities.

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