Question: Daubert, Inc., planned to issue and sell at par 10-year, $1,000 face value bonds totaling $400 million next month. The bonds have been printed with

Daubert, Inc., planned to issue and sell at par 10-year, $1,000 face value bonds totaling $400 million next month. The bonds have been printed with a 6% coupon rate. Since that printing, however, Moody’s downgraded Daubert’s bond rating from Aaa to Aa. This means the bonds will have to be offered to yield buyers 7%. How much less than it expected will Daubert collect when the bonds are issued? Ignore administrative costs and commissions.

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The bonds will sell for P B PMTPVFA kn FVPVF kn k 35 n 20 P B 301421... View full answer

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