(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
Related questions
Question
finance
![(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)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01d01b29-ede7-42ba-8dcd-8c0b18e94cc8%2Fb4daaad5-b81c-4e23-815c-c42c718302f7%2Fqpy22uh_processed.jpeg&w=3840&q=75)
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)
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Essentials Of Investments](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781260013924/9781260013924_smallCoverImage.jpg)
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
![FUNDAMENTALS OF CORPORATE FINANCE](https://www.bartleby.com/isbn_cover_images/9781260013962/9781260013962_smallCoverImage.gif)
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Foundations Of Finance](https://www.bartleby.com/isbn_cover_images/9780134897264/9780134897264_smallCoverImage.gif)
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
![Fundamentals of Financial Management (MindTap Cou…](https://www.bartleby.com/isbn_cover_images/9781337395250/9781337395250_smallCoverImage.gif)
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
![Corporate Finance (The Mcgraw-hill/Irwin Series i…](https://www.bartleby.com/isbn_cover_images/9780077861759/9780077861759_smallCoverImage.gif)
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education