Nico Trading Corporation Is Considering Issuing Long-Term Debt

question 135

True/False

Nico Trading Corporation is considering issuing long-term debt. The debt would have a 30 year maturity and a 10 percent coupon rate. In order to sell the issue, the bonds must be underpriced at a discount of 5 percent of face value. In addition, the firm would have to pay flotation costs of 5 percent of face value. The firm's tax rate is 35 percent. Given this information, the after tax cost of debt for Nico Trading would be 7.26 percent.

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Aform of authority wherein power is granted through an established structure or system, such as in managerial or governmental roles.

Coercive Power

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Reward Power

The influence and control an individual has over others by providing or withholding rewards.

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