Your firm is issuing 

​$100100 

million in straight bonds at par with a coupon rate of 

5.7 %5.7% 

and paying total fees of 

3.2 %3.2%. 

What is the net amount of funds that the debt issue will provide for your​ firm?

Question content area bottom

Part 1

Total proceeds from the issuance are 

​$enter your response here. 

 ​(Round to the nearest​ dollar.)

To calculate the net amount of funds that the debt issue will provide for the firm, we need to subtract the total fees from the total proceeds of the bond issuance. Here's how we do it step by step:

1. **Total proceeds from bond issuance:**  
   The firm is issuing bonds worth \$100,100,000 at par, which means they will receive the full amount of \$100,100,000.

2. **Total fees paid:**  
   The firm is paying fees amounting to 3.2% of the total issuance. We can calculate the fees as:
   \[
   \text{Fees} = 100,100,000 \times \frac{3.2}{100} = 3,203,200
   \]

3. **Net proceeds:**  
   The net proceeds will be the total amount of the bond issuance minus the fees:
   \[
   \text{Net proceeds} = 100,100,000 - 3,203,200 = 96,896,800
   \]

Thus, the **net amount of funds** that the debt issue will provide for your firm is **\$96,896,800**.

Would you like more details or have any questions?

---

Here are 5 related questions:
1. How do you calculate the bond yield to maturity (YTM)?
2. What is the significance of issuing bonds at par?
3. How does a bond's coupon rate affect its price in the market?
4. How are bond issue fees typically structured?
5. What are the advantages and disadvantages of issuing straight bonds versus convertible bonds?

**Tip:** When calculating fees for financial transactions, always verify if percentages are applied to the face value or other metrics like market price.

Your firm is issuing $100,100,000 in straight bonds at par with a coupon rate of 5.7% and paying total fees of 3.2%. What is the net amount of funds that the debt issue will provide for your firm?

Learn how to calculate the net proceeds from a $100.1 million bond issuance with a 5.7% coupon rate and 3.2% fees. This detailed solution explains the steps to subtract fees from total proceeds to find the amount the firm will receive, making it ideal for finance students and professionals.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation