Apollos Beta bond has just reached the end of its period of call protection, has 10 years to go until maturity, and has a face value of $1,000 Its coupon rate is 16 and the interest rate is currently 10 Should Apollo refund this issue if refunding costs a total of 8 of the value of the debt refunde...

The cost of not refunding is the present value of the future cash flows to be paid out ...

Apollos Beta bond has just reached the end of its period of call protection, has 10 years

Question:

Apollo’s Beta bond has just reached the end of its period of call protection, has 10 years to go until maturity, and has a of $1,000. Its rate is 16% and the interest rate is currently 10%. Should Apollo refund this issue if refunding costs a total of 8% of the value of the debt refunded plus the call penalty?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...