Calculating Costs of Issuing Debt Roy's Bar,Inc

question 75

Multiple Choice

Calculating Costs of Issuing Debt Roy's Bar,Inc.,needs to raise $25 million to finance firm expansion.In discussions with its investment bank,Roy's learns that the bankers recommend a debt issue with an offer price of $1,000 per bond and they will charge an underwriter's spread of 6 percent of the gross price.How many bonds will Roy's need to sell in order to receive the $25 million they need?

• A)23,500
• B)25,000
• C)26,500
• D)26,596

---

Definitions:

Feasible Solution

A solution to a problem that meets all the constraints and requirements, often used in the context of optimization problems.

Quantity

A term denoting the amount or number of units of a particular item or material.

Inequality

Inequality refers to the unfair situation in society when resources or opportunities are distributed unevenly among different groups or individuals.

Constraints

Limitations or restrictions that dictate the parameters within which a system can operate, often influencing the outcome of projects and planning.