Solutions to Chapter 9 Problems

The present value of the interest payments is $105,000 x 7.360 = $772,800. The cost of the loan, however, includes both the total present value of the interest payments and the $200,000 underwriting fee, a total of $972,800. c. Preferred stock: $2,000,000 x 5% = $100,000. The present value of the dividend payments is $100,000 x 7.360 = $736,000. ................
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