Compute the market value of the bonds

Assignment Help Finance Basics

Reference no: EM13301471

Sincere Stationery 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 coupon rate and a 10 year maturity. 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?

Reference no: EM13301471

Questions Cloud

What is annual demand for a single item d : A production process is used to produce 20 different items, under intermittent batch production. When inventory or projected inventory of an item drops to a certain level, a production order is released for Q units of that item. Because product dem..

What is the kinetic energy of the flywheel after charging : Delivery trucks that operate by making use of energy stored in a rotating flywheel have been used in Europe. What is the kinetic energy of the flywheel after charging

Calculate the internal rate of return : The initial outlay associated with the expansion would be $1,950,000, and the project would generate free cash flows of $450,000 per year for six years. The appropriate required rate of return is 9 percent.

Compute the ph you would expect to measure : calculate the pH you would expect to measure if 15.0mL of 0.5M acetic acid were mixed with 25.0mL of 0.5M sodium acetate

Compute the market value of the bonds : Sincere Stationery 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 coupon rate and a 10 year maturity. The investors require a 9 percent rate of retur..

Calculate the period of revolution of the asteroid in years : An asteroid, whose mass is 1.70×10-4 times the mass of Earth, Calculate the period of revolution of the asteroid in years

What changes in interest rates and spot exchange : outline the combination of borrowing, depositing and currency transations on the spot market by which the ontario goverment could devise a synthetic forward contract.

Explain widely used in positron emission tomography : Fluorine-18 is a radioisotope widely used in positron emission tomography to investigate brain activity. The half-life is 109.8 minutes. How long will it take for 2.75 ug of 18F to decay to 500 ng

What pressure is applied to the floor beneath the suitcase : A suitcase (mass m = 18 kg) is resting on the floor of an elevator. What pressure (in excess of atmospheric pressure) is applied to the floor beneath the suitcase

User Account

All Pages