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# Wyatt Oil is contemplating issuing a 20-year bond with semiannual coupons, a coupon rate of 5%, and ...

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5 years ago
Wyatt Oil is contemplating issuing a 20-year bond with semiannual coupons, a coupon rate of 5%, and a face value of $1000. Wyatt Oil believes it can get a AAA rating from Standard and Poor's for this bond issue. What is the difference in the price the company will receive if the rating is BBB instead of AAA? A)$97.17
B) $130.30 C)$0
D) $26.41 Textbook ## Corporate Finance: The Core Edition: 4th Authors: Read 804 times 1 Reply ### Related Topics Replies wrote... 5 years ago  DExplanation: D) If the company receives AAA: FV = 1000, N = 40, I = 2.4, PMT = 25, Compute PV =$1025.53If the company receives BBB: FV = 1000, N = 40, I = 2.8, PMT = 25, Compute PV = $928.36Difference =$1025.53 - 928.36 = \$97.17
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