I = 1000 * 8% = 80； T is the tax rate, which is 25%, so t = 0.25, 1-t = 0.75.
I( 1-T)=80*0.75=60
P is the issue price (including premium), that is,1000 *1.1=100.
F is the distribution fee, that is, 5%, so 1-f=0.95.
p( 1-f)= 1 100 * 0.95 = 1045
The above formula can be written as: cost of capital =60/ 1045=0.0574.
The answer is 5.74%
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Bonds are securities issued by debtors such as governments, enterprises and banks in accordance with legal procedures in order to raise funds and promise creditors to repay the principal and interest on a specified date. [ 1]
Bond/debenture is a kind of financial contract, which is a debt certificate issued to investors when the government, financial institutions and industrial and commercial enterprises directly borrow money from the society and promise to pay interest at a certain interest rate and repay the principal according to the agreed terms. The essence of a bond is a certificate of debt, which has legal effect. There is a creditor-debtor relationship between bond buyers or investors and issuers, bond issuers are debtors and investors (bond buyers) are creditors [2].
Bond is a valuable security. Because the interest of bonds is usually determined in advance, bonds are a kind of fixed-interest securities. In countries and regions with developed financial markets, bonds can be listed and circulated.
A statement that the company meets the conditions for issuing corporate bonds.
According to the provisions of relevant laws, regulations and normative documents such as the Company Law of People's Republic of China (PRC), the Securities Law of People's Republic of China (PRC) and the Measures for the Administration of Corporate Bond Issuance and Trading, the board of directors of the company believes that the company meets the requirements of publicly issuing corporate bonds to professional investors (hereinafter referred to as "professional investors") as stipulated in the current corporate bond policy and the Measures for the Administration of Corporate Bond Issuance and Trading.
Overview of this problem
(a) the size and face value of the issue
The scale of corporate bonds issued this time shall not exceed RMB 9.8 billion (including RMB 9.8 billion). The specific issuance scale shall be submitted to the shareholders' meeting to authorize the board of directors or the authorized person of the board of directors to determine within the aforementioned scope according to the company's capital demand and the market situation at the time of issuance. The face value of the bond is RMB 100 yuan.
(2) Term of bonds
The term of ordinary corporate bonds issued this time is not more than 10 year (including 10 year), which can be a single-term variety or a mixed variety with multiple maturities.
The specific term composition and issue scale of the corporate bonds issued this time shall be submitted to the shareholders' meeting to authorize the board of directors or the authorized person of the board of directors to determine according to the company's capital demand and the market situation at the time of issuance before issuance.
(3) Bond interest rate and its determination method.
The coupon rate of corporate bonds issued this time will be determined through consultation between the company and the bookkeeping bank within the preset interest rate range according to the results of off-line inquiry bookkeeping. This bond coupon rate adopts simple interest and annual interest rate, excluding compound interest.
(4) Mode of issuance
The corporate bonds issued this time are in the form of public offering. After being registered by the China Securities Regulatory Commission, it can be issued at one time or in installments. The specific issuance method is submitted to the shareholders' meeting to authorize the board of directors or the authorized person of the board of directors to determine according to the company's capital needs and the market situation at the time of issuance.
(5) Guarantee arrangement
The corporate bonds issued this time are unsecured bonds.
(6) Redemption clause or resale clause.
Whether the corporate bonds issued this time involve redemption clauses, resale clauses and related clauses shall be submitted to the shareholders' meeting to authorize the board of directors or the authorized person of the board of directors to determine.
(7) Use of raised funds
The funds raised from this issuance of corporate bonds are intended to be used to repay interest-bearing debts, supplement working capital, project construction and other purposes permitted by applicable laws and regulations. The specific purpose and the proportion of the amount shall be submitted to the shareholders' meeting to authorize the board of directors or the authorized person of the board of directors to determine according to the actual needs of the company.