$9-12.($Cost of debt$)$ Microfinance Company needs to raise $$800,000$ to improve its cash position. It has decided to issue a $$1,000$ par value bond with a $15$ percent annual coupon rate and a $5-$year maturity. The investors require a $16$ percent rate of return.

a$.$ Compute the market value of the bonds.

b$.$ What will the net price be if the flotation costs are $5$ percent of the market price?

c$.$ How many bonds will the company have to issue to receive the needed funds?

d$.$ What is the company's after$-$tax cost of debt if the average tax rate is $20$ percent and the marginal tax rate is $30$ percent?