Question cost of debt gillian stationery corporation needs, Ask an Expert

Finance

Question: (Cost of debt) Gillian Stationery Corporation needs to raise ?$575,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 7.8 percent with interest paid semiannually and a 10-year maturity. Investors require a rate of return of 10.4 percent.

a. Compute the market value of the bonds.

b. How many bonds will the firm have to issue to receive the needed funds?

c. What is the firm's after-tax cost of debt if the firm's tax rate is 34 percent?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92800550

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Assume the standard deviation of dell stock is 24 and the

Assume the standard deviation of Dell stock is .24 and the standard deviation of General Motors is .17. If you put 130% of your wealth in Dell and take a 30% short position in General Motors and the standard deviation of ...

The company metallica heavy metal mining needs to diversify

The Company Metallica Heavy Metal Mining needs to diversify its operations. Some recent monetary information shown here: Stock price--------------------$ 74 Number of shares-------------30,000 Total assets ------------ ...

What is marketing discipline what is most peoples

What is marketing discipline? What is most people's perception of marketing discipline? Name an organization that has done a great job marketing. What did they do to make you feel this way?

The risk-free rate of return is 52 percent and the market

The risk-free rate of return is 5.2 percent and the market risk premium is 8.4 percent. What is the expected rate of return on a stock with a beta of 1.34?

Rick bought a 30-year bond when it was issued by macroflex

Rick bought a 30-year bond when it was issued by Macroflex Corporation 15 years ago. The bond has a $1,000 face value and a coupon rate equal to 7 percent and the coupon is paid every six months. If the yield on similar- ...

Question - alakazam corp began business on january 1 2016

Question - Alakazam Corp. began business on January 1, 2016. At December 31, 2016, it had a $4,500 balance in the Deferred Tax Liability account that pertains to property, plant, and equipment acquired during 2016 at a c ...

Imagine there is a 100000 t-bill that matures in 130 days

Imagine there is a $100,000 T-bill that matures in 130 days. The T-bill has a discount yield of 2.102%. Ignoring fees or commissions, how much in dollars would I pay for this T-bill?

Really struggling with this question any help and insight

Really struggling with this question. Any help and insight is greatly appreciated. The current price of a 10-year, $1,000 par value bond is $1,158.91. Interest on this bond is paid every six months, and the simple annual ...

What is the standard hedge fund hf compensation structure

What is the standard hedge fund (HF) compensation structure and how do high watermark provision benefit or impose costs on HF investors?

1 the additional interest rate premium required to

1. The additional interest rate premium required to compensate the lender for the probability that a borrower will not be able to repay interest and principal on a loan is known as? a. inflation premium b. default risk p ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert