# 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.

- 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?

## ANSWER

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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

=**6.336**x

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## Assignment

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xxxxx of xxxxx xxxxxxx xxxxxxxxxx xxxxxxxxxxx xxxxx xx xxxxx xxxxxxxx to improve xxx manufacturing plant. xx has xxxxxxx xx xxxxx a $1,000 par value bond with xx annual xxxxxx rate of 11.1 percent xxxx interest paid semiannually and x 15- xxxx xxxxxxxxx Investors require a rate xx xxxxxx of 9.6 percent.

a. Compute the market xxxxx xx the bonds.

c. xxx many bonds xxxx the xxxx have xx xxxxx to xxxxxxx the needed funds?

xx What xx the xxxx’x xxxxxxxxx xxxx of debt if xxx xxxx’x tax rate xx xx percent?

**a. **

xxxxxxx xxxxxx x

x $111(7.782) x xxxxxxxxxxx

= $1,115.80

x *‘xxx’ comes by multiplying &xxxx xxxx xxxxxx xxxxxx rate xxx xxxx xxxxxxx xx xxxxxxx x*

*x ‘xxxxx’ xxxxx xx finding xxx xxxxx xx xxxxxxx xxxxx xx xxxxxxx )*

**b.** Number of Bonds = x 404 Bonds

**c. Formula:**

xxxxxxx tax cost of dept x xxxxx xxxxx (1 – tax rate)

xxxxxxxxxx (1 - 0.34) x 7.35%

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## 100% CORRECT

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**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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## 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

xxxxxxx 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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