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1. Global Firm, Inc. plans to issue long-term bonds to raise funds to finance its growth. The firm has existing bonds that are similar to
1. Global Firm, Inc. plans to issue long-term bonds to raise funds to finance its growth. The firm has existing bonds that are similar to the new bonds it expects to issue. The existing bonds have a face value equal to $1,000, mature in 15 years, pay $80 annually and are currently selling for $1,091 each. The firms marginal tax rate is 35 percent. a. What should be the coupon rate on the new bond issue? (Hint - it will be equal to the YTM on existing bonds). b. What is the firm's after-tax cost of debt
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