Suppose a firm wants to borrow $200 million for 5 years to fund capital expenditures, and is
considering the choice of a bank loan or a public issue through an investment banking firm as underwriter.
For simplicity, we will assume that in either case the firm will issue pure-discount debt. The bank demands a 10.25% interest rate (with no fee), while the underwriter states that the interest cost will be 9.25 percent with 3% flotation costs. Which funding source provides the lower effective interest cost?
a. the bank loan
b. the public issue
c. both provide exactly the same effective interest cost
B
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Which of the following is true of unprofitable customers?
A) They produce a referral value that is over three times their customer lifetime value. B) They are loyal customers in waiting. C) They buy a lot from many companies and do not have a strong preference for one over the other. D) They have a low desire to repurchase but are unable to move easily to another company's product. E) They are a result of mismanaged customer selection.
Scalar equivalence, also called metric equivalence, is established if the other types of equivalence have been attained
Indicate whether the statement is true or false