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Compute the bond issue price

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Reference no: EM132952739

Question - Baiman, Inc. issues $1,000,000 of zero-coupon bonds that mature in 10 years. Compute the bond issue price assuming that the bonds' market rate is:

a. 10% per year compounded semiannually. Round your answers to the nearest dollar.

b. 12% per year compounded semiannually.

c. If prior to the debt issue at 12%, the firm had total assets of $3.5 million and total equity of $1 million, what would be the effect of the new borrowing on the financial leverage of the firm?

Reference no: EM132952739

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