(Cost of debt) Gilan Stationery Corporation needs to raise $574,000 to improve its manufacturing plant has decided to issue a $1,000 par value bond with an annual coupon rate of 79 with interest paid semiannually and a 10-year maturity Investors require a rate of return of 11.1 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 lax rate is 34 percent? The market value of the bonds is Round to the nearest cant) The number of bonds that the company needs to sell isbonds (Round up to the nearest integer) The firm's after-tax cost of debt is Round to two decimal places)
(Cost of debt) Gilan Stationery Corporation needs to raise $574,000 to improve its manufacturing plant has decided to issue a $1,000 par value bond with an annual coupon rate of 79 with interest paid semiannually and a 10-year maturity Investors require a rate of return of 11.1 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 lax rate is 34 percent? The market value of the bonds is Round to the nearest cant) The number of bonds that the company needs to sell isbonds (Round up to the nearest integer) The firm's after-tax cost of debt is Round to two decimal places)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:(Cost of debt) Gillian Stationery Corporation needs to raise $574,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 7.9 percent
with interest paid semiannually and a 10-year maturity Investors require a rate of return of 11.1 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?
The market value of the bonds is $(Round to the nearest cent)
b. The number of bonds that the company needs to sell isbonds. (Round up to the nearest integer)
The firm's after-tax cost of debt is% (Round to two decimal places)
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