What effect does changing the coupon rate

Assignment Help Finance Basics

Reference no: EM13267822

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.

Assume an 8 percent coupon rate. What effect does changing the coupon rate have on the firm's after-tax cost of capital?

Why is there a change?

Reference no: EM13267822

Questions Cloud

What current flows through the resistor for the resistance : The bottom of the conduction band at one end of a silicon resistor is at the same energy level as the top of the valence band at the other end. What current flows through the resistor if the resistance is 1.12 kOhms

Calculate the cost of internal common equity : The firms marginal tax rate is 34 percent. Calculate the cost of (a) internal common equity and (b) external common equity. Please show your work.

Understanding of leadership : Discuss why you think considerations of moral leadership and ideal leadership-as they have been treated across much of Western history-are important to an understanding of leadership today and, more specifically, to your own leadership practice.

Find the probability that the coin c4 was tossed : Further suppose that the coins C1, C2, and C3 are biased such that the probabilities of a head occuring for coins C1, C2, and C3 are 0.9, 0.75, 0.60, respectivley, while the fourth coin C4 is a fair coin. A. If the ou..

What effect does changing the coupon rate : Assume an 8 percent coupon rate. What effect does changing the coupon rate have on the firm's after-tax cost of capital?

The standard deduction last year to compute his tax liabili : Spencer Duck (SSN 277-31-7264) is single and his eight-year-old son, Mitch, lives with him nine months of the year in a rented condominium at 321 Hickory Drive in Ames, Iowa. Mitch lives with his mother, Spencer's ex-wife, during the summer mo..

What should the thickness h be so that touch sensor register : A touch sensor base on a piezoresistor built into a micromechanical cantilever made of silicon is cnnected in a Wheatstone-bridge configureation with a Vo = 1 volt. If L = 1.44cm and W = 1 cm

How did notions of moral and ideal leadership change : How did notions of moral leadership and ideal leadership change over the course of history, and how did these notions affect leadership practices during specific historical periods and within specific historical contexts?

What is the rate of change of the voltage on the capacitor : The switch in a RC circuit is closed. If the resistance is 134462ohms, the capacitance 7.5 microF, and the applied voltage 18 volts, what is the (average) rate of change of the voltage on the capacitor, to the nearest tenth of a V/s, during the fi..

User Account

All Pages