Cost of debt) Sincere Stationery Corporation needs to raise $451,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 11.1 percent with interest paid semiannually and a 15-year maturity. Investors require a rate of return of 9.6 percent.
- Compute the market value of the bonds.
- How many bonds will the firm have to issue to receive the needed funds?
- What is the firm's after-tax cost of debt if the firm's tax rate is 34 percent?
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Find xx xxxxxxxxx
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xxx market price of the xxxx xx the xxxxxxx value of xxx xxxxxx xxxxxxxx and xxx par value
Semiannual coupon rate= 1000
Semiannual rate of return= =4.8%
xxxxxx xxxxxx x
= x xxxxxxxxxxx
xxxxxx of xxxxx to raise x 451000=
The after-tax cost xx xxxxx xxxx xx debt(1-tax rate)
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