Question
Gillian Stationery Corporation needs to raise $606 comma 000 to improve its manufacturing plant. It has...
Gillian Stationery Corporation needs to raise $606 comma 000 to improve its manufacturing plant. It has decided to issue a $1 comma 000 par value bond with an annual coupon rate of 7.4 percent with interest paid semiannually and a 10-year maturity. Investors require a rate of return of 11.6 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?
a. The market value of the bonds is $
b. The number of bonds that the company needs to sell is
(Round up to the nearest integer.)
c. The firm's after-tax cost of debt is
(Round to two decimal places.)
Homework Answers
Answer #1
Not the answer you're looking for?
Similar Questions
(Cost of debt) Gillian Stationery Corporation needs to raise $638 comma 000 to improve its manufacturing...
(Cost of debt) Gillian Stationery Corporation needs to raise
$638 comma 000 to improve its manufacturing plant. It has decided
to issue a $1 comma 000 par value bond with an annual coupon rate
of 8.4 percent with interest paid semiannually and a 15 -year
maturity. Investors require a rate of return of 10.6 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...
Gillian Stationery Corporation needs to raise $563,000 to improve its manufacturing plant. It has decided to...
Gillian Stationery Corporation needs to raise $563,000 to
improve its manufacturing plant. It has decided to issue a $1,000
par value bond with an annual coupon rate of 8.1 percent with
interest paid semiannually and a 15-year maturity. Investors
require a rate of return of 11.4 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...
incere Stationery Corporation needs to raise ?$700,000 to improve its manufacturing plant. It has decided to...
incere Stationery Corporation needs to raise ?$700,000 to
improve its manufacturing plant. It has decided to issue a ?$1,000
par value bond with an annual coupon rate of 11 percent and a
maturity of 19 years. The investors require a rate of return of 13
percent. a. Compute the market value of the bonds. b. What will the
net price be if flotation costs are 12 percent of the market?
price? c. How many bonds will the firm have to...
Sincere Stationery Corporation needs to raise ?$650,000 to improve its manufacturing plant. It has decided to...
Sincere Stationery Corporation needs to raise ?$650,000 to
improve its manufacturing plant. It has decided to issue a $1,000
par value bond with an annual coupon rate of 13 percent and a
maturity of 18 years. The investors require a rate of return of 7
percent.
a. Compute the market value of the bonds.
b. What will the net price be if flotation
costs are 14 percent of the market? price?
c. How many bonds will the firm have to...
(Cost of debt) Sincere Stationery Corporation needs to raise $450,000 to improve its manufacturing plant. It...
(Cost of debt) Sincere Stationery 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 15 percent
and a maturity of 18 years. The investors require a rate of return
of 14 percent.
a. Compute the market value of the bonds.
b. What will the net price be if flotation costs are 11 percent
of the market price?
c. How many bonds will the...
Smith Stationary Ltd needs to raise $500,000 to improve its manufacturing plant. It has decided to...
Smith Stationary Ltd needs to raise $500,000 to improve its
manufacturing plant. It has decided to issue a $1,000 face value
bond with a 8% annual coupon rate paid semi-annually and a 5-year
maturity. The investors require 10% rate of return. a.Calculate the
price of this bond. How many bonds need to be issued to receive the
required amount of fund? b.What is the firm after-taxed cost of
debt given the tax rate is 30%
Smith Stationary Ltd needs to raise $500,000 to improve its manufacturing plant. It has decided to...
Smith Stationary Ltd needs to raise $500,000 to improve its
manufacturing plant. It has decided to issue a $1,000 face value
bond with a 8% annual coupon rate paid semi-annually and a 5-year
maturity. The investors require 10% rate of return. a.Calculate the
price of this bond. How many bonds need to be issued to receive the
required amount of fund? b.What is the firm after-taxed cost of
debt given the tax rate is 30%
Sincere Stationary Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to...
Sincere Stationary Corporation needs to raise $500,000 to
improve its manufacturing plant. It has decided to issue a $1,000
par value bond with a 12 percent annual coupon rate and a 10 year
maturity. If floatation costs are 10.5 percent of the market price,
how many bonds will the firm have to issue to receive the needed
funds?
Give an example of why a company like Sincere Stationary
Corporation would issue debt at 12 percent interest in today’s
interest rate...
Sincere Stationary Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to...
Sincere Stationary Corporation needs to raise $500,000 to
improve its manufacturing plant. It has decided to issue a $1,000
par value bond with a 12 percent annual coupon rate and a 10 year
maturity. If floatation costs are 10.5 percent of the market price,
how many bonds will the firm have to issue to receive the needed
funds?
Give an example of why a company like Sincere Stationary
Corporation would issue debt at 12 percent interest in today’s
interest rate...
Lunar Vacations needs to raise $ 5 comma 500 comma 000$5,500,000 for its new project (a...
Lunar Vacations needs to raise
$ 5 comma 500 comma 000$5,500,000
for its new project (a golf course on the moon). Astro
Investment Bank will sell the bond for a commission of
2.5 %2.5%.
The market yield is currently
7.9 %7.9%
on twenty-year semiannual bonds. If Lunar wants to issue a
5.6 %5.6%
semiannual coupon bond, how many bonds will it need to sell to
raise the
$ 5 comma 500 comma 000$5,500,000?
Assume that all bonds are issued at...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 9 minutes ago
asked 13 minutes ago
asked 17 minutes ago
asked 35 minutes ago
asked 50 minutes ago
asked 53 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago