Calculating Costs of Issuing Debt Soccer Games,Inc.,with the help of its investment bank recently issued $10 million of new debt.The offer price (and face value)on the debt was $1,000 per bond and the underwriter's spread was 5 percent of the gross proceeds.What is the amount of capital funding Soccer Games raised through this debt offering?
A)$1,000
B)$0.5 million
C)$9.5 million
D)$10 million

Question

Quizplus · Accepted Answer

The amount of capital funding raised by Soccer Games,Inc. through this debt offering can be calculated as follows:
$10 million (total debt issued) - $500,000 (underwriter's spread) = $9.5 million. Therefore, the correct answer is C.