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Submitted by aoel.meg on Wed, 2017-01-11 12:19
due on Wed, 2017-01-11 12:35
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FINANCE 3 - DUE ASAP

NEED DONE ASAP - FINANCE

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.

  1. Compute the market value of the bonds.
  2. How many bonds will the firm have to issue to receive the needed funds?
  3. What is the firm's after-tax cost of debt if the firm's tax rate is 34 percent?
Answer
Submitted by Prof Double R on Wed, 2017-01-11 12:36
teacher rated 150 times
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price: $3.00

ANSWER

body preview (3 words)

Find xx xxxxxxxxx

file1.docx preview (42 words)

xxx market price of the xxxx xx the xxxxxxx value of xxx xxxxxx xxxxxxxx and xxx par value

Semiannual coupon rate= 1000

xxxxx

Semiannual rate of return= =4.8%

xxxxxx xxxxxx x

= x xxxxxxxxxxx

xx 1117.97

xxxxxx of xxxxx to raise x 451000=

= 403.41

= 404

The after-tax cost xx xxxxx xxxx xx debt(1-tax rate)

xxxxxxxxxxxxx

=6.336x


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Answer
Submitted by pavan1001 on Sat, 2017-01-14 10:43
teacher rated 184 times
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body preview (41 words)

xxxxxxxx x

 

a.

xx

k x 9.6/2 x 4.8% x xxxxx

x> (1+k) x xxxxx

x x 15*2 x 30

Coupon x xxxxxxxxxxxx x xxxxx xxx

 

xx of xxxx = Coupon*((1+k)^n -1)/(k*(1+k)^n  x Face value/(1+k)^n

= 55.50*(1.048^30 -1)/(0.048*1.048^30)  +1000/1.048^30

x xxxxxxx xxx xxxxxxxxx

xx

xx

xx

No. xx xxxxx to be xxxxxx = 451000/1117.97 x 403.41 = xxx xxxxxxxxx

 

c.

xx

 

xxxxx xxx xxxx xx xxxx x YTM(1-T) x xxxxxxxxxxx = xxxxx = xxxxx (ANSWER).


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Answer
Submitted by knickhelp on Wed, 2017-01-11 12:31
teacher rated 2 times
5
price: $2.00

100% Correct Solution

body preview (16 words)

Hi

xx

xxx xxxxx for the solution. xxx xx know xxx any issues.

xx

xxxxxx xxx xxxxxxx

xxxxxxxxx

file1.xlsx preview (26 words)

Sheet1

xxx
xxxx Value xxxx
xxxxxx Coupon Rate 11.1
Semi xxxxxx xxxxxx Rate xxxx
xxxxx to xxxxxxxx xxxxx
a. Market xxxxx xx Bond $1,117.97
b. xxx xx xxxxx xxxxxx xxx
xx After xxx xxxxx


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