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Sincere stationary corporation needs to raise $450,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 12 percent and a maturity of 19 years. The investors require a rate of return of 8 percent.

A) What is the market value of the bonds?

B) What will the net price be if floatation costs are 9 percent of the market price?

C) How many bonds will the firm have to issue to receive the needed funds?

D) What is the firm's after-tax cost of debt if its average tax rate is 25 percent and its marginal tax rate is 33 percent?

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Statistics and Probability, Statistics

Category:- Statistics and Probability
Reference No.:- M91004028

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