Bonjour,  
 
Je galère trop avec un exercice de finance, je vous serais reconnaissant si vous pouviez m'aider à le faire.
 
Lennoxville Sports is in need of $25,000,000 of new long-term financing. Because it is not experienced in seeking new financing, it has employed you to provide it with advice.
a. If Lennoxville seeks long-term debt financing in the form of bonds or bank loans, what alternatives are available? What are the features of each?
b. If a bond issue is decided upon, what type of features might be included in the bond indenture? What is the impact of these provisions?
c. If the term structure of interest rates is upward sloping, is a long-term bond issue necessarily best? What if the term structure is downward sloping?
d. Two different bond issues are being considered: a 25-year coupon bond that will pay interest semiannually and carry a coupon interest rate of 12 percent, or a 25-year zero-coupon bond that has a yield to maturity of 11 percent (compounded semiannually).
Page 6 of 9 + 4 Tables
Page 7 of 9 + 4 Tables (1) From the firm's standpoint, what are the advantages and disadvantages of a zero-coupon
bond versus a coupon bond? What are the tax consequences?
(2) Ignoring flotation costs, what is the size of the zero-coupon bond issue?
(3) Assume that after either bond is issued, interest rates jump 2 percent. What is the new price of the two bonds? Which has the bigger percentage change in its value? Why?
e. Instead of issuing debt, Lennoxville could issue preferred stock. The preferred stock would carry a dividend of 11 percent. How is preferred stock similar to debt? To equity?