BC Brewery issues $50 million in straight bonds at an original issue discount of 1% and a coupon rate of 7.5%.The firm also pays underwriting fees of 3.5% on the face value of the bonds.What are the net proceeds to BC Brewery from the bond issue?

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The net proceeds are calculated by subtracting both the original issue discount and the underwriting fees from the face value of the bonds. The original issue discount is 1% of $50 million, which is $0.5 million, reducing the amount to $49.5 million. The underwriting fees are 3.5% of $50 million, which is $1.75 million. Subtracting both from the face value, $50 million - $0.5 million - $1.75 million = $47.75 million.

BC Brewery Issues $50 Million in Straight Bonds at an Original