Calculating Costs of Issuing Debt Home Improvement,Inc

question 79

Multiple Choice

Calculating Costs of Issuing Debt Home Improvement,Inc.,needs to raise $2 million to finance plant expansion.In discussions with its investment bank,Home Improvement learns that the bankers recommend a debt issue with gross proceeds of $1,000 per bond and they will charge an underwriter's spread of 7 percent of the gross proceeds.How many bonds will Home Improvement need to sell in order to receive the $2 million they need?

• A)2,140
• B)2,151
• C)2,150,537
• D)2,140,000

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