Question: 5. Eagle Air Inc. has decided to issue 3-year maturity, 16% coupon bonds with a total nominal value of 300 milliont. Due to the good

5. Eagle Air Inc. has decided to issue 3-year maturity, 16%

5. Eagle Air Inc. has decided to issue 3-year maturity, 16% coupon bonds with a total nominal value of 300 milliont. Due to the good reputation of the company, the bonds were sold at 10% premium and floatation costs will amount to 7% of total nominal value. The principal will be repaid at the end of the maturity. The tax rate is 22%. Compute the cost of this bond issue. Try 11% first. 5. Eagle Air Inc. has decided to issue 3-year maturity, 16% coupon bonds with a total nominal value of 300 milliont. Due to the good reputation of the company, the bonds were sold at 10% premium and floatation costs will amount to 7% of total nominal value. The principal will be repaid at the end of the maturity. The tax rate is 22%. Compute the cost of this bond issue. Try 11% first

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