What effect does changing the coupon rate

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

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