On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. The bonds pay interest semiannually on July 1st and January 1st. The bonds have a call provision which allows Tonks...


On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. The<br>bonds pay interest semiannually on July 1st and January 1st. The bonds have a call provision<br>which allows Tonks to repurchase them at a price of 105 any time after the first<br>market yield for the bonds at the date of issue is 7%. Tonks pays $8,000 in issuance costs<br>and has a June 30th year end.<br>year.<br>The<br>Tonks calls the bonds on 11/1/10, four months after the July 2010 payment.<br>1. At what premium or discount does this issue sell?<br>

Extracted text: On January 1, 2009 Tonks Hair Products Inc. issues $500,000 of 10 year, 7.5% bonds. The bonds pay interest semiannually on July 1st and January 1st. The bonds have a call provision which allows Tonks to repurchase them at a price of 105 any time after the first market yield for the bonds at the date of issue is 7%. Tonks pays $8,000 in issuance costs and has a June 30th year end. year. The Tonks calls the bonds on 11/1/10, four months after the July 2010 payment. 1. At what premium or discount does this issue sell?

Jun 04, 2022
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