Financial Strategy and Corporate Objectives, Financial Management Environment, Working Capital Management

Notes in answering problems: 1. Do not round off anytime during the computation. 2. Use 360 days in a year unless otherwise stated. 3. When a peso amount is required and it is not a whole peso, round the number off to the nearest centavo. e.g. Type 100666.67 for P100,666.66666 3. When a percent or rate is required and it is irrational, present the answer in percent, rounded off to three decimal places. e.g. Type 33.333 for 33.33333%

What would be the cost of the ideal bond option? * ABC requires P10,000,000 cash at the start of next year for ten years. The following were offered by several banks for a bond issuance. Based on the information below and using the YTM formula, what would be the cost of the ideal bond option? Bank ABCD Face Amount Term $10,500,000 5 years, nonrenewable 9,500,000 5 years, renewable 10,000,000 10 years 10,000,000 10 years Est. Net Nominal Proceeds Rate 10,500,000 5% 9,500,000 8% 10,200,000 10% 10,500,000 11%