Crandal Dockworks is undergoing a major expansion.The expansion will be financed by issuing new 15-year,$1,000 par,9% annual coupon bonds.The market price of the bonds is $1,070 each.Five Rivers flotation expense on the new bonds will be $50 per bond.Crandal's marginal tax rate is 35%.What is the yield to maturity on the newly-issued bonds?

Question

Quizplus · Accepted Answer

The yield to maturity (YTM) is calculated based on the bond's current market price, coupon payments, par value, and time to maturity. Given the bond's market price of $1,070, a coupon rate of 9%, and a par value of $1,000, the YTM is approximately 8.17%.

Crandal Dockworks Is Undergoing a Major Expansion