Telsa Corporation needs to raise funds to finance a plant expansion, and it has decided to raise 25-year zero coupon bonds to raise money. The required return on the bonds will be 9 percent. a. What will these bonds sell for issuance? b. Using the IRS amortization rule, what interest deduction can the company take on these bonds in the first year? In the last year? c. Repeat part (b) using the straight-line method for the interest deduction. d. Based on your answers in (b) and ( c), which interest deduction method would Telsa Corporation prefer? Why? Please show work in excel.
Paper#2775 | Written in 18-Jul-2015Price : $25