### Between making public offering-arranging private placement

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##### Reference no: EM131027221

You need to choose between making a public offering and arranging a private placement. In each case the issue involves \$9.3 million face value of 10-year debt. You have the following data for each: • A public issue: The interest rate on the debt would be 8.15%, and the debt would be issued at face value. The underwriting spread would be 1.67%, and other expenses would be \$73,000. • A private placement: The interest rate on the private placement would be 8.3%, but the total issuing expenses would be only \$23,000. a-1. Calculate the net proceeds from public issue. (Enter your answer in nearest dollars not in millions.)

a-2. Calculate the net proceeds from private placement. (Enter your answer in nearest dollars not in millions.)

b-1. Calculate the PV of extra interest on private placement. (Enter your answer in dollars not in millions. Round your answer to 2 decimal places.)

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