a firm raises capital by selling $35,000 worth of debt with flotation cost equal to 1%...
Homework Answers
To find the YTM, we need to put the following values in the financial calculator:
N = 10;
PV = -(35,000 - 1%) = -34,650;
PMT = 9%*35,000 = 3,150;
FV = 35,000;
Press CPT, then I/Y, which gives us 9.16
So, YTM = 9.16%
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firm raises capital by selling $35,000 worth of debt with flotation
cost equal to 1%...
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