BC Brewery Issues $120 Million in Straight Bonds at an Original

question 25

Multiple Choice

BC Brewery issues $120 million in straight bonds at an original issue discount of 1.5% and a coupon rate of 5%.The firm also pays underwriting fees of 3% on the face value of the bonds.What are the net proceeds to BC Brewery from the bond issue?

• A)$114.6 million
• B)$118.2 million
• C)$116.4 million
• D)$108.6 million
• E)$110.4 million

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