Question: Great Nevada Inc. has 3 bond issues outstanding: Book value of issue Coupon rate YTM Price (%) $14,000,000. 5% 6% 91.62 $5,000,000. 7%. 4% 120.2

Great Nevada Inc. has 3 bond issues outstanding:

Book value of issue Coupon rate YTM Price (%)

$14,000,000. 5% 6% 91.62

$5,000,000. 7%. 4% 120.2

$32,000,000 6.5% 7% 94.7

1. What is the market value of the first bond issue?

2. What is the combined market value of all 3 issues?

3. What is the actual (pre-tax) cost of debt ?

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