Bond issue is for $50M, carrying a 5.58% coupon and a 20-year maturity. It is recommended the price issues to yield 5.6%.
1. Calculate the cost of repricing the bond issue.
2. Provide the expected additional cost associated with the recommendation of pricing the issue to yield the more competitive return.
3. Provide the additional cost to the company.
Solution is comprised of annual and semiannual bond pricing issue which includes calculations for future value, present value, yield to maturity, coupon rate, coupon payment, repricing bond cost and company cost.