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.)
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