Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have

Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have

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Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have
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Ford wants to raise debt by issuing bonds. They were informed by their investment banking consultant that they would have to pay a commission of 2.0% of the selling price on new issues. The company currently has an 7% coupon rate bond issued, which pays interest semi-annually, will mature in 10 years, has a $1000 face value, and is currently trading at $1043.

Calculate the appropriate cost of debt for Ford?

Expert Answer:

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To calculate the appropriate cost of debt for Ford we need to consider the yield to maturity YTM of
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