Compute the market value of the bonds

Reference no: EM13266093

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 14 percent annual couppn rate and a 10-year mautrity. The investors require a 9 percent rate of return.
a. Compute the market value of the bonds.
b. What will the net price be if flotation costs are 10.5 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 34 percent?
A.) Rework 9-9 as follows: Assume an 8 percent coupn rate. What effect dos changing the coupon rate have on the firm's afer-tax cost of capital?
B.) Why is there a change?

Reference no: EM13266093

Questions Cloud

Evaluate k for 2no(g)+o2(g)=2no2(g) : Calculate K for 2NO(g)+O2(g)=2NO2(g) from the observation that when equilibrium is established at 500K, there are 0.190 moles NO2, 2.65x10^-4 moles NO, and 0.606 moles O2 in a volume of 0.759 liters.

Calculate the power dissipated in the resistor and the power : Measurements taken on various resistors are shown below. For each, calculate the power dissipated in the resistor and the power rating necessary for safe operation using standard components with power ratings of 1/8 W, 1/4 W, 1/2 W, 1 W, or 2 W

What are annual credit sales : Rise Above This, Inc., has an average collection period of 64 days. Its average daily investment in receivables is $42,800. Assume 365 days per year.

Evaluate the equilibrium constant for n2(g) : The Haber process is used in industry to produce ammonia from N2 and H2. A reactor contains NH3, N2, and H2 at equilibrium at 1000 K. The concentration of NH3 is 0.102 moles/liter, N2 is 1.03 moles/liter, and H2 is 1.62 moles/liter. Calculate the ..

Compute the market value of the bonds : 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 14 percent annual couppn rate and a 10-year mautrity. The investors require a 9 percent rate of retur..

What must be the regulator input voltage for regulator : If an individual needs a positive voltage other than 5 V, what voltage regulator would you recommend. What must be the regulator input voltage for this voltage regulator to operate properly.

What are the barriers to control success : What are the keys to successful control, and what are the barriers to control success.

Explain how much energy in joules is lost or gained : How much energy in joules is lost or gained when one mole of 90Y with a mass of 89.907152 amu undergoes beta decay to produce 90Zr with a mass of 89.904703 amu

Calculate the momenta of the cars before the collision : A car with a mass of 1500 kg is traveking directly east at a slow speed of 1.20 mph and eleastically with a smaller car of mass of 1275 kg, Calculate the momenta of the cars before the collision

User Account

All Pages