Use the CAPM to calculate the required return on investment.
trouble
Royal Road Company, Inc. wants to increase its debt by selling bonds to $ 900 par value with a coupon interest of 13% to 10 years, in which they will be paying annual interest. To make the sale, a $ 30 bonus will be offered. Costs incurred in this issue (flotation costs) are $ 15 per bond. Use the approximation formula to calculate the cost of debt.