Neighborhood Drugstore plans to sell 10,000 bonds each with a face value of $1,000.If all of the bonds eventually sell for $990 each and the firm's investment banker receives a commission of 2.50% for every bond sold,what are the net proceeds to the firm from the sale of the bond issue?

Question

Quizplus · Accepted Answer

The firm sells each bond for $990, so the total without commission is 10,000 bonds * $990 = $9,900,000. The investment banker's commission is 2.50% of this amount, which is $9,900,000 * 2.50% = $247,500. The net proceeds to the firm are $9,900,000 - $247,500 = $9,652,500.

Neighborhood Drugstore Plans to Sell 10,000 Bonds Each with a Face