1) (Cost of debt)Sincere Stationery Corporation needs to raise $509,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with an annual coupon rate of 10.2 percent with interest paid semiannually and a 10-year maturity. Investors require a rate of return of 7.5 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 $enter your response here. (Round to the nearest cent.)

Part 2

b.The number of bonds that the company needs to sell is enter your response here bonds. (Round up to the nearest integer.)

Part 3

c.The firm's after-tax cost of debt is enter your response here%. (Round to two decimal places.)

2. (Flotation costs)The Pandora Internet Radio Company was started in 2000 to provide a personalized radio listening experience over your computer or iPhone and is privately owned. However, its success could easily lead its owners to take the company public with the sale of common stock to the public. When companies sell common stock for the first time the flotation cost can be very high. If Pandora needs $76 million to finance an acquisition and sells shares to the public, how much stock would they have to sell if flotation costs are expected to be 15 percent?

The flotation cost adjusted initial outlay is $enter your response here. (Round to the nearest dollar.)