Required: a. Under what circumstances would Hurley Co. managers consider calling the bonds? Management of Hurley Co. would be interested in calling the bonds if interest rates decrease enough so that...

Hurley Co. has outstanding $420 million face amount of 9% bonds that were issued on January 1, 2007, for $409,500,000. The 20-year bonds mature on December 31, 2026, and are callable at 102 (i.e., they can be paid off at any time by paying the bondholders 102% of the face amount).

Required:<br>a. Under what circumstances would Hurley Co. managers consider calling the bonds?<br>Management of Hurley Co. would be interested in calling the bonds if interest rates decrease<br>enough so that the cost of a new borrowing to pay off the old bonds at a<br>% call<br>premium would be<br>less<br>than the cost of continuing to pay the<br>% stated<br>interest rate on the old bonds.<br>

Extracted text: Required: a. Under what circumstances would Hurley Co. managers consider calling the bonds? Management of Hurley Co. would be interested in calling the bonds if interest rates decrease enough so that the cost of a new borrowing to pay off the old bonds at a % call premium would be less than the cost of continuing to pay the % stated interest rate on the old bonds.

Jun 06, 2022

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Required: a. Under what circumstances would Hurley Co. managers consider calling the bonds? Management of Hurley Co. would be interested in calling the bonds if interest rates decrease enough so that...

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