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MC Question 9
Formulae & Tables
FM (F9) Formulae Sheet
You will get this Formula Table at the exam so learn well how to apply it in your FM (F9) Exam
A company has 7% loan notes in issue which are redeemable in seven years’ time at a 5% premium to their nominal value of $100 per loan note. The before-tax cost of debt of the company is 9% and the after-tax cost of debt of the company is 6%.
What is the current market value of each loan note?
A. $92·67
B. $108·90
C. $89·93
D. $103·14