Problemsuco co needs 800000 to develop a plant it issues a, Ask an Expert

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Problem:

Suco co needs $800,000 to develop a plant. It issues a $1,000 par value bond with a coupon rate of 12 percent and 15 years maturity. The investors rate of return of 12 percent.

Required:

What is value of the bonds?

What will the net price be if flotation costs are 12 percent of market price?

What is the firm's after tax cost of debt if the average tax rate 25 percent and its marginal tax rate is 37 percent?

Note: Please show how to work it out.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148526

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