Calculate the net proceeds of the public issue

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Reference no: EM13927946

You need to choose between the following types of issues:

• A public issue of $10 million face value of 10-year debt. The interest rate on the debt would be 10.5%, and the debt would be issued at face value. The underwriting spread would be 1.9%, and other expenses would be $78,000.

• A private placement of $10 million face value of 10-year debt. The interest rate on the private placement would be 11.0%, but the total issuing expenses would be only $34,000.

a-1. Calculate the net proceeds of the public issue. (Enter your answer in dollars not in millions.)

Net proceeds of the public issue $

a-2. Calculate the net proceeds of the private placement. (Enter your answer in dollars not in millions. Round your answer to nearest whole dollar amount.)

Net proceeds of the private placement $

Reference no: EM13927946

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