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Financing East Coast Yachts Expansion Plans with a Bond Issue: After Dan's EFN analysis for East Coast Yachts (closing case chapter 3) Larissa has...
Financing East Coast Yachts Expansion Plans with a Bond Issue:After Dan's EFN analysis for East Coast Yachts (closing case chapter 3) Larissa has decided to expand the company's operations. She has asked Dan to enlist an underwriter to help sell $40 million new 20 year bonds to finance new construction. Dan has entered into discussions with Kim McKenzie, an underwriter from the firm of Crowe & Mallard, about which bond features East Cost Yachts should consider and also what coupon rate the issue will likely have. Although Dan is aware of bond features, he is uncertain as to the costs and the benefits of some of them, so he isn't clear on how each feature would affect the coupon rate of the bond issue. 6). Are investors really made whole with a make whole call provision?7). After considering all the relevant factors, would you recommend a zero coupon issue or a regular coupon issue? Why? Would you recommend an ordinary call feature or a make whole call feature? Why?
