BC Brewery Issues $50 Million in Straight Bonds at an Original

question 19

Multiple Choice

BC Brewery issues $50 million in straight bonds at an original issue discount of 1% and a coupon rate of 7.5%.The firm also pays underwriting fees of 3.5% on the face value of the bonds.What are the net proceeds to BC Brewery from the bond issue?

• A)$49.5 million
• B)$50 million
• C)$47.75 million
• D)$48.25 million
• E)$44 million

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