26-101 What are the annual coupon payments promised to each tranche? (Assume no prepayments and non?amortization of principal.)

Question

Quizplus · Accepted Answer

Tranche A has a face value of $100 million and a coupon rate of 5.5%, so the annual coupon payment would be:

$100 million x 5.5% = $5.5 million

Tranche B has a face value of $90 million and a coupon rate of 7%, so the annual coupon payment would be:

$90 million x 7% = $6.3 million

Therefore, the annual coupon payments promised to each tranche are $5.5 million on Tranche A and $6.3 million on Tranche B.

26-101 What Are the Annual Coupon Payments Promised to Each