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F. Naz
F. Naz, Chartered Accountant
Category: Homework
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Experience:  Experience with chartered accountancy
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If we chose to issue zero bonds, given that the projected market

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If we chose to issue zero bonds, given that the projected market rate for our zero bonds will decrease to 3% at year 10, would it be financially beneficial to issue zeros, then recall all outstanding debt (zeros) at year 10 instead of issuing and paying the coupon rate?

Details of project:

600 coupon bonds issued
1810 zero bonds issued
bond issuance rate either bonds =7.5%
$600,000 initial investment
tax rate=35%
discount rate=9%
term of bonds=15 years
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Customer: replied 4 years ago.


Hello Muhammad,


 


I have questions on the solutions you provided. I sent you an email and has not received a response. Please respond soon so, I can rate your solutions.


 


Thank you.


 


Maria

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