Questions:
What are the advantages of debt over equity? If debt is
cheaper, why would anyone choose equity? How do taxes play a role
in this?
Assume the following for a standard bond issue within the
United States:
The face value of the bonds is $95,000.
Stated rate on the bond is 8%.
Interest is paid every 6 months (8%/2 = 4% every payment).
The bonds are due in 10 years.
Assume 3 scenarios, the market rate is 8%, 7%,...